Currency markets did not fully buy in to the proposal to push the debt ceiling deadline back to late November that is currently being negotiated. Risk currencies did rise through the US session but were still range bound from where they have been trading this week. The Australia dollar managed to bounce up from yesterday’s low of 93.89 US cents and is back trading at just below 94.50 US cents with the fall in the participation rate in yesterday’s jobs numbers was responsible for the pressured selling. The Federal shutdown did spark a surge in jobless claims which hit a high not seen since April of 375,000 claims but markets discounted this as a once off for now.
We did see evidence of some confidence that a resolution would be met with the US dollar continuing to make ground against the Yen. We had seen the Yen as the major beneficiary of the budget impasse and debt ceiling deadline with the Dollar trading up to 98.30 yen after being 160 pips lower than that mark. The Yen weakness was also buoyed by comments from Bank of Japan’s Governor Kuroda affirming that the bank would do what is necessary to defeat deflation. Gold price also traded in a similar risk direction to the Yen and is down $45 across the second half of this week hitting 1281.91 USD an ounce earlier this morning.
Our local session is void of any top-tier economic data today and that is also true for the Asian region also. We are likely to see similar end to the week as last week were positions were hedged off or closed leading into the weekend due to the gap risk for Monday open.
Joel Murphy
www.pepperstone.com Joel Murphy is a currency analyst and market commentator for Forex Broker Pepperstone and he regularly features on Sky Business News Australia. He has worked in both retail and institutional Forex for last 8 years and completed a Bachelor of Commerce and a Bachelor of Arts from Monash University
