The U.S. Dollar was steadily lifted against its major peers during the Asian trading session, supported by the Wednesday announcement by the U.S. Senate that the standoff between the political parties could be coming to an end as a deal had been reached between them. At this point, the only hurdle to be faced is the approval of the agreement later today by the U.S. House of Representatives, and it looks as though even previous opponents might give this agreement their collective nod of approval.
As of 10:57 a.m. (JST) in Tokyo, the U.S. Dollar Index was trading at 80.543 .DXY, a gain of 0.1% and not far from yesterday’s session peak of 80.754 .DXY. The USD/JPY pair was 0.2% higher and trading at 98.96 Japanese Yen, only a single pip from Wednesday’s high. The EUR/USD pair traded about 0.1% lower at $1.3519, close to Wednesday’s trough of $1.3472.
The Final Hurdle
If approved in the House, the debt ceiling would be temporarily pushed higher and the U.S. Treasury Department allowed to continue borrowing on the government’s behalf until early February. Just prior to then, another negotiation will have to take place to permanently raise the ceiling and the borrowing authority. Investors are still somewhat worried that the House won’t approve the deal in which case that a technical default of maturing debt is still a possibility, thus analysts don’t expect to see too much demand for ultra short-term U.S. Treasuries.