All about the US and the deal that has apparently been reached. USDJPY opened higher and jumped from 77.00 to 77.65 in very early trading. We slipped back to 77.30 before it was announced that Obama was having a press release.
This time risk was bought, with equities up 1.5% to 2% across the board, and EURJPY the main driver.
Standout flows have been to buy EURJPY and sell $ASIA. KRW still attracts inflows and high CPI print helped onite. More rate hikes here.
Every politician has made comments about the deal, some positive and some negative. While the details have not been released yet, there have been various news articles that mention the reduction of the deficit varying from 1 trillion to 2.8 trillion over the next decade. The House of Representatives and the Senate still need to vote and approve this deal (apparently will do so today) and as such both Moodys and Standard and Poors did not comment today in regards to their ratings.
. However it is believed at this point that this package will not do enough for the US to maintain its AAA rating. Late in the afternoon, the market appeared to be caught long USDJPY, and we came in lower heading into London.
Please see links and statements below.
Moody’s: Neither debt plan protects the nation’s AAA rating: {http://bit.ly/pbkEHV}
“Its a deal: Obama, Congress will avert default.” {http://apne.ws/nbo9Hs}
USD/Asia Run
USDKRW 1052.0 (Friday morning mids 1055.5)
USDINR 44.19 (44.32)
USDPHP 41.94 (42.26)
USDCNY1y 6.3705 (6.3855)
USDIDR 8465 (8505)
USDMYR 2.9625 (2.9625)
USDTWD 28.78 (28.805)
USDSGD 1.2002 (1.2050)
HSBC Global Research