11 Oct 2013
Relief rally continues on crumbling of Republican resolve
FXstreet.com (London) - Though President Obama has not yet given his support to proposals tabled by Republican leaders, the fact that the GOP has surrendered its strategic position on the debt ceiling has helped trigger a relief rally, lifting risk assets.
Yesterday, Republicans proposed a compromise agreement that would allow a six-week extension of the debt ceiling in exchange for wide-ranging negotiations over spending cuts. The move comes after public opinion sided strongly against House Republicans and their role in the government shutdown that has led to 800,000 government employees being furloughed. Significantly, the Republican proposals do not contain any riders that would lead to a defunding or postponing of the implementation of the Affordable Care Act, which has been a lightening rod for political partisanship in debt ceiling negotiations.
The US dollar looks set to close of the week with its first weekly gain in five. Global markets lifted as risk appetite was given a boost by the news. If congress does not reach an agreement to extend its debt ceiling, it will hit its hard limit on 17 October, after which the US would no longer be able to service it's debt obligations. The crumbling of Republican resolve has squeezed the possibility of a historic US default from slim to none.
Yesterday, Republicans proposed a compromise agreement that would allow a six-week extension of the debt ceiling in exchange for wide-ranging negotiations over spending cuts. The move comes after public opinion sided strongly against House Republicans and their role in the government shutdown that has led to 800,000 government employees being furloughed. Significantly, the Republican proposals do not contain any riders that would lead to a defunding or postponing of the implementation of the Affordable Care Act, which has been a lightening rod for political partisanship in debt ceiling negotiations.
The US dollar looks set to close of the week with its first weekly gain in five. Global markets lifted as risk appetite was given a boost by the news. If congress does not reach an agreement to extend its debt ceiling, it will hit its hard limit on 17 October, after which the US would no longer be able to service it's debt obligations. The crumbling of Republican resolve has squeezed the possibility of a historic US default from slim to none.