- Congress Agrees to December Extension
- Euro & GBP Struggle Despite Improving Data
- Stocks Boosted by Debt Agreement
The US Dollar forex market remained as strong as ever moving toward the end of this week as the period of risk aversion in the market seemingly continues. This is despite the US congressional agreement to extend the debt ceiling at least in the short term until December. This has avoided a crisis that had spooked many in recent days but has done little to help lift a disjointed GBP and Euro. Wall Street though has been a different story. Markets there recovered again leaving them in good shape relative to earlier in the week, heading into the weekend in positive territory.
Vital Debt Extension Agreed by Congress
There had been some doubt for those forex trading, and around the wider economy, whether an agreement to extend the debt ceiling could be reached by congress. They have proven this to be possible despite a protracted period of political jostling. Republicans insisting Democrats were on their own, while on the other side, Democrats talked of reckless abandon from their political rivals.
The close Senate vote, 50-48 in favor of lifting the ceiling means the U.S. does not have to worry about defaulting on its obligations at least in the short term. This agreement will raise the limit by almost $480 billion and push the issue down the road to December. In doing so, fears of a recession that Treasury Secretary Yellen commented would happen if the country defaulted, have been soothed.
Other Major Forex Currencies Remain Lower
There may be some surprise from forex brokers. Despite the positive seeming news that the debt ceiling is to be lifted, and the news that weekly jobless claims continue to drop, now down to just 326,000 initial filings in the week prior, the Euro and Sterling continue to struggle. Both moved lower still in early trading.
The Euro is now down at close to 1.155 as it struggles to deal with the continuing strength of the Dollar even though the domestic challenges it faces are not as prevalent as in previous months. This is particularly true on COVID-19 figures in the region. The Pound also remains cautious around 1.36 with Brexit continuing to be a pressure.
Positive Sentiment Helps Wall Street
One place where there was a positive ripple from the debt ceiling deal and improving job numbers, was on Wall Street. Traders there are clinging to any sign of good news after what has been a torrid few weeks from mid-September. The Dow Jones added more than 300 points with major tech and reopening stocks also clawing back some losses from recent weeks.
Early trading heading into Friday was little changed though many will be hoping to end on a high with what has been a wild October so far. NFP numbers will be in focus as something that could move this and the forex market today.