US dollar weakens despite debt limit raise

US stock markets and the US dollar index of ICE London exchange fell last week as investors assessed the damage from Hurricane Harvey with Hurricane Irma approaching Florida. The SP 500 ended the week 0.6% lower and the US dollar index lost 1.6% for the week.

The SP 500 fell Tuesday after Labor Day holiday as investors had a chance to react to North Korea nuclear device test Sunday. It rose 0.3% on Wednesday after President Trump and congressional lawmakers agreed to fund government and raise debt limit to December 15. SP 500 slipped 0.1% Thursday led by financial sector as insurers sold off on hurricane damage concerns.

The dollar weakened in every session last week. USDIDX fell 0.2% Tuesday after Fed Governor Lael Brainard said the Fed may have to slow down its pace of interest-rate hikes, citing the recent low readings for inflation. It fell 0.8% Thursday as European Central Bank left policy unchanged while President Mario Draghi suggested the ECB will reassess the bank’s bond buying program this autumn.

The major events this week are: the Swiss National Bank and Bank of England rate decisions on Thursday, and US August retail sales on Friday. No changes in interest rates are expected.