FX Week 6 October 2013

USD holding up surprisingly well, considering


Considering the events of the last fortnight, with the US government shutting down, Fed tapering on hold and the ECB signaling a more relaxed stance over its monetary policy, we are a little surprised that the USD is not already much weaker. EUR/USD barely pushed above 1.36 last week before falling back again, while GBP/USD could not sustain gains above 1.62. There is as yet no end in sight to the shutdown, however, and if it persists through this week without resolution the situation will become more complicated by the proximity to the debt ceiling deadline on or around October 17th. This would certainly place more pressure on risky asset markets and presumably push the USD down as well as that date approaches.

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