With the U.S. government’s stalemate now entering week number two, the U.S. Dollar tumbled close to a recently struck 8-month trough as investors ponder lawmakers’ failure to reach any consensus and the affect that might have on the looming debt default date. That is clearly on the minds of Japanese and Chinese officials as the two Asian countries are the U.S.’ largest creditors holding U.S. Treasury notes which amount to the trillions of dollars; a U.S. government debt default could have massive repercussion worldwide.
As reported at 11:15 a.m. (JST) in Tokyo, the U.S. Dollar Index, the market’s measure of the greenback’s relative strength, held steady at 79.979 .DXY after dropping 0.2% during the overnight hours in New York. The USD/JPY pair also steadied at 96.80 Japanese Yen, after falling to an 8-week trough earlier of 96.55 Japanese Yen earlier. The EUR/USD pair traded near to its session low of $1.3361, moving away from today’s high of $1.3582.
Markets Certain of Agreement
Analysts say trading is relatively calm, however, that that most market participants expect a deal to eventually emerge to halt the fiscal crisis before mid-October when debt payments are due. Societe Generale analysts say that traders are wary though confident that a deal will be brokered, however, they’re reluctant to be too aggressive with risk-off positions as the expectations of a relief rally after an agreement is reached is very likely.