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30 Sep 2013
USD slides on debt ceiling-induced gloom
FXstreet.com (London) - In the midst of debt ceiling-induced gloom, the dollar has slid across the board, with stocks also sliding as it looks increasingly impossible that Congress will pull an 11th hour compromise agreement out of the bag to allow a temporary extension of the debt limit.
The dollar has fallen against all of the majors, with its biggest falls against the Kiwi dollar – down 0.54 percent so far.
If the Senate fails to pass a bill allowing a temporary extension, the US government will shut-down, albeit partially, for the first time in 17 years.
Neither side of the aisle seem willing to give ground – Republicans want any agreement to raise to the debt ceiling to be tied to a cut in federal spending, including a one year delay in the implementation of the Affordable Care Act. And as many times as the Republican-led House passes a bill to do just that, the Democrat-controlled Senate kills it on the floor. Added to that, there is simply no way that Barack Obama who has made the Act the flagship policy of his presidency is going to allow the GOP to delay or defund its provisions.
But though the debt ceiling stand-off has weighed on the dollar, there is some good news for the greenback. In previous shutdowns the dollar has come under selling pressure heading into the freeze, but has rallied on its resolution, regaining most or all of its losses.
Though the S&P 500 has come under some pressure, down 0.61 percent so far, the twisted logic of post-2008 markets may mean that a government shutdown decreases the chances of an October tapering of the Fed’s asset purchase programme, kicking that liquidity worry into 2014 and helping to support stocks against downside pressure.
EUR/USD is currently trading at USD1.3534, up 0.35 percent.
GBP/USD is at USD1.6190, up 0.28 percent.
The dollar has fallen against all of the majors, with its biggest falls against the Kiwi dollar – down 0.54 percent so far.
If the Senate fails to pass a bill allowing a temporary extension, the US government will shut-down, albeit partially, for the first time in 17 years.
Neither side of the aisle seem willing to give ground – Republicans want any agreement to raise to the debt ceiling to be tied to a cut in federal spending, including a one year delay in the implementation of the Affordable Care Act. And as many times as the Republican-led House passes a bill to do just that, the Democrat-controlled Senate kills it on the floor. Added to that, there is simply no way that Barack Obama who has made the Act the flagship policy of his presidency is going to allow the GOP to delay or defund its provisions.
But though the debt ceiling stand-off has weighed on the dollar, there is some good news for the greenback. In previous shutdowns the dollar has come under selling pressure heading into the freeze, but has rallied on its resolution, regaining most or all of its losses.
Though the S&P 500 has come under some pressure, down 0.61 percent so far, the twisted logic of post-2008 markets may mean that a government shutdown decreases the chances of an October tapering of the Fed’s asset purchase programme, kicking that liquidity worry into 2014 and helping to support stocks against downside pressure.
EUR/USD is currently trading at USD1.3534, up 0.35 percent.
GBP/USD is at USD1.6190, up 0.28 percent.