US debt ceiling damages risk

<p>The risk trade is trading with a slight soft bias with the key themes being the never ending taper debate, with the price action showing […]</p>

The risk trade is trading with a slight soft bias with the key themes being the never ending taper debate, with the price action showing short-term movements on US data releases as the market has focused its attention on the imminent need to raise the US debt ceiling.

It seems nothing was learnt from the fallout out of 2011, which resulted in the S&P downgrading the US from a AAA status. The time frame is getting tight for an agreement with the Federal Government not funded beyond the 30th of September as the new financial year starts on the 1st of October. Cash balance projections show the US treasury will run out of cash by the 23rd of October. The stalemate all revolves around the Obama health care bill, with neither side looking to negotiate at this point.

In other news, the NZD traded back to pre FOMC levels following a larger than expected trade deficit in New Zealand. The focus is also turning to the month re-balancing, with most anticipating USD selling in G10 space bar the JPY.

 Another quiet day from a data perspective, with only US durable goods and US new home sales due for release this afternoon.



Supports 1.3450-1.3410-1.3380 | Resistance 1.3525-1.3580-1.3620


Supports 98.40-97.80-97.40 | Resistance 99.20-99.80-100.00


Supports 1.5950-1.5925-1.5875 | Resistance 1.6020-1.6075-1.6160

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