During Monday’s Asian trading session the U.S. Dollar once again failed to gain any traction against its safe haven rivals, the Swiss Franc and the Japanese Yen, while the U.S. Dollar Index remained near to an 8-month trough as the U.S. government’s stalemate enters another week. Over the weekend, the Republican Party’s House Speaker said that his party would not agreement on any proposals to increase the debt ceiling without the inclusion of spending cuts.
As reported at 10:26 a.m. (JST) in Tokyo, the U.S. Dollar Index traded at 80.04 .DXY, not far from Thursday’s multi-month low of 79.627 .DXY. The USD/JPY pair slipped to 97.20 Japanese Yen, a loss of 0.3% and near last month’s 5-week trough of 96.93 Japanese Yen. Market players may now be considering unwinding Yen shorts as the prospect of the U.S. government defaulting on its debt rises. The USD/CHF pair traded at 0.9055 Swiss Francs, a loss of 0.2% and edging closer to Thursday’s 19-month trough. The EUR/USD pair traded at $1.3569, near to Thursday’s 8-month peak of $1.36465.
Economic Effects of Stalemate Worrisome
The majority of market players expect that the debt ceiling issue will be dealt with at the last moment, but the real worry is the impact that the government shutdown is having on the U.S. economy which is still very fragile, and the monetary policy decisions that might have to be taken by the Federal Reserve Bank in light of them.