26 Sep 2013
Flash: USD hit by fresh skepticism over Debt Ceiling - Investec
FXstreet.com (Barcelona) - Jonathan Pryor, Corporate Treasury Analyst at Investec notes that just as the US dollar was getting to grips with a ‘no taper’ vote from the Federal Reserve last week it is now having to tackle a fresh wave of scepticism from markets as budget talks on raising the debt ceiling appear to be grinding to a halt.
Key Quotes
“Yesterday, Treasury Secretary Lew suggested the US could run out of cash by October 17th making this the key date to watch for Congress in the US to grant fresh spending authority to the Treasury. After this point, debt ceiling constraints would put the US at the risk of default.”
“As the dollar licks its wounds from the fall-out from Bernanke’s decision not to taper, the danger of reaching the debt ceiling within weeks is a serious threat. It is likely the situation will ultimately be resolved, as it was in 2011, but this doesn't mean that the US economy will emerge unscathed with market sentiment and credit rating downgrades just two of the threats that could lead to considerable risk off repercussions.”
“At the same time lawmakers are also having to find ways of resolving differences to pass the funding bill, in order to prevent a government shutdown as soon as Tuesday, although this looks as if it might be on its way to becoming fixed.”
Key Quotes
“Yesterday, Treasury Secretary Lew suggested the US could run out of cash by October 17th making this the key date to watch for Congress in the US to grant fresh spending authority to the Treasury. After this point, debt ceiling constraints would put the US at the risk of default.”
“As the dollar licks its wounds from the fall-out from Bernanke’s decision not to taper, the danger of reaching the debt ceiling within weeks is a serious threat. It is likely the situation will ultimately be resolved, as it was in 2011, but this doesn't mean that the US economy will emerge unscathed with market sentiment and credit rating downgrades just two of the threats that could lead to considerable risk off repercussions.”
“At the same time lawmakers are also having to find ways of resolving differences to pass the funding bill, in order to prevent a government shutdown as soon as Tuesday, although this looks as if it might be on its way to becoming fixed.”