by: Barbara Zigah
After U.S. President Barack Obama announced late last night that the U.S. legislature had finally hammered out a deal which would raise the U.S. debt ceiling and ensure that a U.S. default would not occur, Asian markets heaved a collective sigh of relief and sent the U.S. currency broadly higher, even as traders unwound their safe haven positions.
As reported at 3:10 p.m. (JST) in Tokyo, the U.S. Dollar was higher against the common currency, Euro, trading at 1.4414. Against the Japanese Yen, the U.S. Dollar was 1.2% higher retreating from an intra-day high of 78.00 Yen, trading at 77.65 Yen, off of the 4-month trough of 76.70 Yen struck on the EBS trading platform last week. The greenback also moved higher against the safe haven Swiss Franc, gaining 1% to 0.7936 Swiss Francs.
Market players are cautiously optimistic that the deal will be confirmed by the full House and Senate vote ahead of the August 2nd debt deadline, but any overconfidence is being tempered by the strong likelihood that the U.S.’s sterling AAA credit rating is going to be downgraded, nonetheless. Also worrying to markets is the prospect for economic growth given the severe budget cuts, which President Obama confirmed will reduce federal spending to a level not seen in better than five decades.