USD stable as traders hold their nerve in hopes of US deal announcement

The US still in talks to re-open and avert a default is starting to make the markets nervous, but there are still no major moves in FX. Yesterday we had a strong USD as the US were talking and it was assumed that a resolution was on the way. This was followed by a weak USD as no decision was made and comments from the White House said we’re far from a deal.

Fitch upped the pressure on the US by stating that it would strip America of its AAA credit rating if they were to default.
Fed’s Fisher also made comments about QE this coming month and due to the Government shutdown and continuing talks on raising the debt limit he sees no QE cuts this month, and he is a very vocal Hawk.

Today’s data announcements start in the UK with the claimant count change and unemployment rate expected at -24.3k and 7.7%. If the data comes in as expected and with no US news until later, this could give cable a lift back above the 1.6000 level which it briefly broke yesterday.

Euro data is to follow with inflation expected to be at 1.1%. If there are no surprises, this may keep the euro subdued due to the outcome of the UK data and maybe a EUR/GBP trade due to uncertainty in the US.

ECB’s Draghi is talking later tonight. Not much is expected with the occasion but it is always worth a listen for any future developments and maybe a view of what is going on in the US and how it will affect the euro.

EUR/USD

Supports 1.3480 1.3400 1.3340 | Resistance 1.3570 1.3600 1.3630

USD/JPY

Supports 98.10 97.90 97.30 | Resistance 98.70 99.05 99.20

GBP/USD

Supports 1.5910 1.5890 1.5770 | Resistance 1.6010 1.6120 1.6180