The US Dollar has weakened against the Pound and fallen to a one-month low against the Japanese Yen as investors seek safe havens as the midnight deadline looms for a deal to be struck to raise the nation’s debt ceiling.
Risk aversion is growing as the Republicans and Democrats remain in a bitter stalemate over President Barack Obama’s Affordable Care Act. The Republicans want to delay the act for a year and alter the law and have used the threat of a shutdown of the Federal government as a way to get their aims achieved. The Democrats however have vowed to not let that happen. With no obvious signs of compromise the market is gearing up for the first government closure in 17 years.
If no deal is made up to 800,000 federal workers will sent home and governmental departments will grind to a halt, potential damaging the US economic recovery. Any potential slowdown to the world’s largest economy will have a negative impact on markets around the world and will damage demand for riskier assets.
In a government shutdown, essential operations and programs with dedicated funding would continue. That includes mail delivery, air-traffic control and Social Security payments. Any shutdown is expected to damage expectations for fourth-quarter growth with some economists citing a decline by as much as 1.4%.
Also weighing heavily on market sentiment is the possible collapse of the Italian government after allies of Silvio Berlusconi withdrew from the government in protest ahead of a special committee meeting on October 4th which is expected vote in favour of stripping the 76-year media tycoon of his seat in the upper house of parliament.
Weaker-than-expected Chinese manufacturing data also dented market sentiment.
US Dollar (USD) Current Exchange Rates
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6196 <
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7407 >
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 97.8925 <
The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6138 >
The Euro/ US Dollar Exchange Rate is currently in the region of: 1.3500 <
(Correct as of 09:25 am GMT)
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