Optimism that a deal which can avert the U.S. defaulting on its debt continues to grow even as the deadline edges closer. Talks between the embattled political parties continue to take place with no clear answer to the way forward which has prompted at least one credit ratings agency, Fitch Ratings, to caution that the government’s AAA sovereign debt rating would be cut if a deal is not imminent and the debt ceiling is not raised in a timely basis.
Initially, there had been speculation that a deal might be announced as late as Tuesday evening but that did not come to fruition. Nonetheless, the U.S. Dollar was able to edge broadly higher, though there had been a slight pullback after investors realized that an announcement of a deal would not be forthcoming.
As reported at 1:18 p.m. (JST) in Tokyo, the USD/JPY pair traded at 98.55 Japanese Yen, a gain of 0.4% and moving away from the low of 97.99 Yen which had been struck on the EBS trading platform on Tuesday just moments after the Fitch caution. The U.S. Dollar Index firmed to 80.539 .DXY, a gain of 0.1% but edging off of a Tuesday peak of 80.703 .DXY; the Index is used by investors to measure the greenback’s relative strength against major rivals.
More Worries on the Horizon
The deadline to increase the debt ceiling is Thursday and while investors are confident that a default will be averted, the next worry is what affect the now two weeks’ long government shutdown is going to have on 4th quarter growth.