Forex: Market Looks for Dollar, Risk Trend Settlement on Debt Deal
• The US Senate approved a debt ceiling deal that looks likely to relieve the government standoff
• Despite the positive outcome, the immediate dollar and risk (S&P 500) reaction was reserved
• A relief rally for currency and capital markets is temporary, and a return to risk trends inevitable
Sign up for John’s email distribution list, here.
Coming down to the wire, the US government worked out a deal to push back the debt ceiling and reopen the Federal government. With the House of Representatives and President still required to sign off on the bill, their is a lingering risk that the deal can break down and send sentiment reeling; but expectations are firmly rooted. Yet, against this level of expectation, the S&P 500 wouldn't overtake its record high nor would the US dollar leverage a meaningful rally. There is a 'relief' rally that both risk trends and the greenback can exploit, but the amount of premium behind this short-term situation remains to be seen. Should we pass this adjustment, dominant fundmental themes can kick back in with very different results than current fundamental scenarios are projecting. We discuss the debt deal and risk trends in today's video.
What kind of Trading best suits you? Technical or Fundamental? Short-term or Long-term? Take our Trader Survey and find out.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.