Currencies: Dollar on track to end week in the red as havens continue to gain

The dollar continued to suffer Friday as investors braced for further volatility in the stock market.

Stock market volatility saw major U.S. indexes have their worst day since 2009 on Christmas Eve and the Dow Jones Industrial Average log its biggest point gain in history on Wednesday followed by a dramatic upside reversal for major indexes on Thursday. Stocks looked primed for another volatile session on Friday.

“The roller coaster in U.S. equity markets at what’s usually a quiet time of year continued on Thursday…The FX market had a more risk-averse takeaway with the Swiss franc leading and Australian dollar lagging,” wrote Adam Button at Intermarket Strategies.

The ICE U.S. Dollar Index DXY, -0.27%  was down 0.3% at 96.231. The gauge is looking at a 0.7% drop in the week. With only one trading day left in the year, it has so far gained 4.5% in 2018.

Traditional havens like the Japanese yen USDJPY, -0.58%  and Swiss franc USDCHF, -0.8302% continued their climb versus the buck on Friday. One dollar bought ¥110.29, and 0.9806 francs, down 0.7% against both currencies.

The Australian dollar AUDUSD, +0.4552%  recovered from the slump it logged during the Asian session and rose versus the greenback, buying $0.7069, compared with $0.7030 late Thursday in New York. Australia’s dollar is one of the most risk-sensitive developed market currencies, sensitive to global growth and commodity prices.

Other dollar rivals, such as the euro EURUSD, +0.1574%  and British pound GBPUSD, +0.2847% also benefited from the dollar weakness and climbed higher.

The partial U.S. government shutdown continues to keep investors on their toes. President Donald Trump tweeted on Friday morning, threatening to “close the Southern border entirely” if congressional Democrats don’t approve funding for a border wall. Trump also complained that the U.S. was U.S. losing money to Mexico through the North American Free Trade Agreement, which was replaced by the U.S.-Mexico-Canada agreement signed in late November after 15 of negotiations.

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