The US Dollar managed to recover some ground against many of its most traded peers on Tuesday as hopes grew that the political impasse over the US budget and debt ceiling could come to an end over the next few days.
President Barrack Obama has come under increasing pressure from the USA’s biggest foreign creditors to negotiate a rise in the debt ceiling with both China and Japan claiming that the ongoing uncertainty being generated by the squabbling US political parties is threatening to destabilize the global economy.
China and Japan hold a combined total of more than $2.4 trillion in US Treasuries and Japanese Finance Minister Taro Aso said that his government is considering the impacts of a default on Japans bond holdings.
“Japan must be aware that the absolute value of those debt holdings would decline. If the debt ceiling problem worsens, it would affect the world economy, we hope this problem will be resolved without delay” Aso told a press conference.
A glimmer of hope that the stalemate could end surfaced after President Obama said that he would accept a short-term increase in the nations borrowing authority in order to avoid a default. Elsewhere a Republican senator was said to be working on a deal to end the impasse in Congress and reopen the federal government.
Obama’s press secretary, Jay Carney, told reporters the president would be willing to accept a short-term debt ceiling increase in order to get past the potential crisis date of October 17 when the government hits the $16.7 trillion borrowing limit.
The President said that he was open to negotiations over his controversial healthcare law, but added that talks would only begin if the weeklong shutdown comes to an end.
“As soon as that happens I am eager and ready to negotiate with Republicans on a whole range of issues how do we create more jobs, how do we build the economy, how do we boost manufacturing,” said Obama.
Positive data out of China also supported the US currency as it offset concerns over the US situation.
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