15 Oct 2013
Morning outlook: After successive debt ceiling compromise rumours markets are waiting for the real deal
FXstreet.com (London) - The boom and bust of Congressional optimism continued yesterday and into the Asian session, though market reaction has been choppy. Equity markets made some gains, but FX markets have yet to show any strongly risk positive moves.
Markets had previously been given a risk-supportive boost late last week, when reports filtered through that Republican leaders were prepared to vote a measure through the House that would extend the debt ceiling in exchange for wide-ranging spending talks. The positive sentiment was checked when talks ran into the weekend without progress.
However, it seems that plans are becoming more concrete. The bulk of the proposal is to fund the government through until 15 January 2014, with the debt ceiling extended until February. In exchange, Republican leaders want a one-year delay in the implementation of the Affordable Care Act reinsurance tax levied on employers, as well as more rigorous means testing for recipients of the Act.
Previously, any Republican proposals that had included policy riders, particularly affecting the funding of Obamacare, had been outright rejected by Senate Democrats.
USD/JPY is down 0.24 percent to JPY98.3995. EUR/USD is up slightly to USD1.3566.
As has been the case since the beginning of the debt ceiling shutdown at the start of the month, look for a strong risk-on rally once concrete proposals with Democrat backing make it to the Senate floor. Until then, the positive effects of compromise rumours are eroding with each false start.
Due to the continued furloughing of federal statisticians, top-tier US data remains thin on the ground. Empire State manufacturing index numbers are due from the NY Fed later today, expected to see a slight month-on-month raise to +7.
Also today are German sentiment numbers from the ZEW Institute. Expectations are for not much movement on last month, with current numbers at 31 and 49 on the expectations index.
Markets had previously been given a risk-supportive boost late last week, when reports filtered through that Republican leaders were prepared to vote a measure through the House that would extend the debt ceiling in exchange for wide-ranging spending talks. The positive sentiment was checked when talks ran into the weekend without progress.
However, it seems that plans are becoming more concrete. The bulk of the proposal is to fund the government through until 15 January 2014, with the debt ceiling extended until February. In exchange, Republican leaders want a one-year delay in the implementation of the Affordable Care Act reinsurance tax levied on employers, as well as more rigorous means testing for recipients of the Act.
Previously, any Republican proposals that had included policy riders, particularly affecting the funding of Obamacare, had been outright rejected by Senate Democrats.
USD/JPY is down 0.24 percent to JPY98.3995. EUR/USD is up slightly to USD1.3566.
As has been the case since the beginning of the debt ceiling shutdown at the start of the month, look for a strong risk-on rally once concrete proposals with Democrat backing make it to the Senate floor. Until then, the positive effects of compromise rumours are eroding with each false start.
Due to the continued furloughing of federal statisticians, top-tier US data remains thin on the ground. Empire State manufacturing index numbers are due from the NY Fed later today, expected to see a slight month-on-month raise to +7.
Also today are German sentiment numbers from the ZEW Institute. Expectations are for not much movement on last month, with current numbers at 31 and 49 on the expectations index.