16 Oct 2013
JPY/USD reflects lack of market conviction over debt ceiling negotiations
FXstreet.com (London) - USD/JPY has continued with choppy trading this morning, with markets lacking conviction about the likely outcome of today’s last-minute debt ceiling talks.
The pair has slid 0.08 percent to USD98.3015, but has ranged between USD98.1500 and USD98.6250 on anticipation of debt ceiling outcomes.
A mooted deal to extend the debt ceiling fell apart yesterday under Tea Party opposition. But with the US set to hit its soft debt ceiling at midnight tonight, the pressure is on for congress to agree on a bill to extend the limit.
The Senate is scheduled to resume at noon on Wednesday, hoping to pick up where they left off yesterday and form a compromise agreement. The decision would then be whether Speaker John Boehner would allow the bill to come to the House, with it looking likely that he would be forced to allow a up or down vote, which could be passed with the House Democrat bloc allied with a Republican minority.
Even if Congress does not reach an agreement by midnight tonight, it will not mean an immediate default and would not necessarily trigger heady dollar selling. The next debt payment is due on 31 October, with social security cheques due on 23 October.
Although Fitch put the US AAA rating on negative watch yesterday, the dollar is not trading as if there is any real fear that the US will default, and could be poised for a big surge if an agreement is finally thrashed out and passed through the Senate.
The pair has slid 0.08 percent to USD98.3015, but has ranged between USD98.1500 and USD98.6250 on anticipation of debt ceiling outcomes.
A mooted deal to extend the debt ceiling fell apart yesterday under Tea Party opposition. But with the US set to hit its soft debt ceiling at midnight tonight, the pressure is on for congress to agree on a bill to extend the limit.
The Senate is scheduled to resume at noon on Wednesday, hoping to pick up where they left off yesterday and form a compromise agreement. The decision would then be whether Speaker John Boehner would allow the bill to come to the House, with it looking likely that he would be forced to allow a up or down vote, which could be passed with the House Democrat bloc allied with a Republican minority.
Even if Congress does not reach an agreement by midnight tonight, it will not mean an immediate default and would not necessarily trigger heady dollar selling. The next debt payment is due on 31 October, with social security cheques due on 23 October.
Although Fitch put the US AAA rating on negative watch yesterday, the dollar is not trading as if there is any real fear that the US will default, and could be poised for a big surge if an agreement is finally thrashed out and passed through the Senate.