Yesterday, the US lawmakers have come to a decision to increase the debt ceiling. The Senate and the House of Representatives have voted for the proposal of a new law which was later at night signed off by President Obama. The US government shutdown was ended; however the eventual solution for the debt problem was postponed to the second quarter of 2014. A potential government liquidation of the United States was avoided for now.
Yesterday afternoon, after the deal was made public, the USD gained strength. Yesterday we had a daily high of 1.3568, falling around 100 pips throughout the day, and hitting a low of 1.3472. The currency pair now trades in the region of 1.3560, back near the levels seen before the sudden drop. The markets apparently expected a deal to happen in any case. The focus is now in the monetary policy and Macro data.
The reaction to the news in the equity markets in Asia was positive and both the ASX in Australia and the Nikkei in Japan closed higher for the day. USD/JPY reached a high of 99 yen which was hit when the USD Senate started voting on the bill. After that it was “buy the rumor, sell the news” and the USD/JPY now trades back down to 98.40. Similar moves were seen in the USD/CHF.
As already mentioned, the market can now focus on economic facts. The retail sales are expected from the UK at 10.30CET and the weekly jobless claims from the US at 14.30 CET. Last week we had a big surprise in the Claims data.