With the U.S. credit markets closed for Columbus Day and the equities focused on the debt and deficit talks in Washington currency traders have found little reason to open new positions or change market views.
The euro has moved barely 40 points since the New York open and just 50 points since Auckland opened yesterday evening. The dollar/yen has been even quieter, managing only 20 points since the New York open and twenty-five since trading began yesterday in Asia. The Dow opened down just over 100 points but has since recovered and at posting was up 20 points. The NASDAQ was up slightly and the S&P 500 down marginally.
Various Democratic and RepublicanSenators have been quoted saying that a deal is near in the upper house to increase the debt limit and end the partial closure of the federal government. Senate Majority Leader Harry Reid told the Associated Press that a deal is “getting closer”.
If this is true the agreement would still have to be accepted by the Republican dominated House. It is thought that the Democratic senators are negotiating with the backing of President Obama. Democrats and the President are attempting to isolate the House Republicans by gaining the approval of their Senate colleagues first.
President Obama is planning to meet this afternoon with the four leaders of Congress, Senate Majority Leader Harry Reid, Minority Leader Mitch McConnell, House Speaker John Boehner and House Minority Leader Nancy Pelosi. Vice-President Joe Biden will also attend.
The Treasury Department has said that it cannot guarantee that the government will be able to pay all its bills past October 17th if the Congress does not permit Washington to borrow more money. Other analysts have said the government will run out of funds sometime between October 22nd and the end of the month.
Treasury Secretary Jack Lew has said the government will not prioritize its payments, presumably paying interest and redemptions on Treasuries first, if Congress does not pass a debt increase in time. The Federal government is currently spending about one-third more than it collects in revenues.
Republicans have been attempting to force changes in the President's healthcare reform law of 2010 and to limit increases in government spending. Democrats and the President have been resisting both moves.
Chief Market Strategist
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