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Dollar Stays Soft On Budget Impasse

Published 10/03/2013, 04:11 AM
Updated 03/09/2019, 08:30 AM

The dollar remains soft against other major currencies in Asian session today. After a meeting between US president Obama and congressional leaders, there was still not resolution on the fiscal impasses that caused the first partial government shutdown in 17 years. Obama insisted that there won't be negotiation on budget until the Republicans raise the debt ceiling without conditions. Meanwhile, House speaker Boehner urged to revolve the differences between political leaders. House Republicans are expected to bring up a plan to raise the debt limit next week as part of the attempt to force Obama into budget negotiation. US is facing a deadline of October 17 to raise the debt limit to avoid a default. The dollar's weakness is mainly centered against European majors and the yen. Due to risk aversion, the Aussie and Kiwi are only mildly higher against the greenback while Canadian is indeed trading in negative territory this week against the greenback.

Boston Fed Rosengren said yesterday that he "strongly and unequivocally" supported Fed's decision to hold off from tapering last month. He said scaling back the $85b a month bond buying program "would have been premature". And, the current budget standoff between congressional leaders could further delay tapering. And, he emphasized that even if economy evolves as expected, Fed should only have a "very slow removal of accommodation over the next several years."

Yesterday, ECB decided to leave the main refinancing rate unchanged at 0.5% as they met in Paris. The deposit rate stayed at 0% and the marginal lending rate at 1%. The central bank said that low interests have been taking effects in the economic recovery and urged governments to carry out reforms and strengthened the deficit levels. Policymakers acknowledged the rise in market rates and pledged to implement suitable measures to counter the problem. More in ECB Left Monetary Stance Unchanged, Reiterated Pledges to Consider All Options to Support Growth.

On the data front, China services PMI improved to 55.4 in September. The eurozone will release final PI services today with retail sales. UK PMI services will also be closely watched. From US, focus will be on jobless claims, ISM services and factory orders.

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