11 Oct 2013
European open: markets buoyed by debt ceiling negotiation breakthrough
FXstreet.com (London) - The US debt ceiling stand-off has had its first breakthrough in negotiations since entrenched partisanship pushed the government into shutdown 10 days ago. Republican leaders met with Barack Obama with proposals to raise the debt ceiling for six weeks to allow for further time for discussions.
The deal would avert any US default, as we are rapidly approaching the 17 October hard ceiling, after which the US would be unable to meet its debt obligations. However, the deal would mean that the government would remain shutdown.
"After a discussion about potential paths forward, no specific determination was made," said White House officials after an hour and a half of discussions between Republican leaders and Barack Obama.
"The President looks forward to making continued progress with members on both sides of the aisle. The President's goal remains to ensure we pay the bills we've incurred, reopen the government and get back to the business of growing the economy, creating jobs and strengthening the middle class."
Equity markets leapt on the news, with the S&P climbing 2.21 percent. The Nikkei rose 1.5 percent over the Asian session.
On the currency front, AUD climbed 0.24 percent, bringing AUD/USD to USD1.0554.
USD/JPY climbed to a session high of JPY98.5600 on unwinding haven positions.
Going forward, all US focus will be on the outcome of the latest debt ceiling compromise discussions. Furloughed government workers mean there is little in the way of hard data releases.
In Europe, he final reading of September CPI is expected to remain unchanged from the flash estimate at 1.6 percent year-on-year.
In the UK, we have construction output data for August, one the last releases of hard data before the first estimate of third quarter GDP is published on 25 October. Consensus estimates are for a 0.8 gain, but recent mortgage data suggests potential for greater upside.
The deal would avert any US default, as we are rapidly approaching the 17 October hard ceiling, after which the US would be unable to meet its debt obligations. However, the deal would mean that the government would remain shutdown.
"After a discussion about potential paths forward, no specific determination was made," said White House officials after an hour and a half of discussions between Republican leaders and Barack Obama.
"The President looks forward to making continued progress with members on both sides of the aisle. The President's goal remains to ensure we pay the bills we've incurred, reopen the government and get back to the business of growing the economy, creating jobs and strengthening the middle class."
Equity markets leapt on the news, with the S&P climbing 2.21 percent. The Nikkei rose 1.5 percent over the Asian session.
On the currency front, AUD climbed 0.24 percent, bringing AUD/USD to USD1.0554.
USD/JPY climbed to a session high of JPY98.5600 on unwinding haven positions.
Going forward, all US focus will be on the outcome of the latest debt ceiling compromise discussions. Furloughed government workers mean there is little in the way of hard data releases.
In Europe, he final reading of September CPI is expected to remain unchanged from the flash estimate at 1.6 percent year-on-year.
In the UK, we have construction output data for August, one the last releases of hard data before the first estimate of third quarter GDP is published on 25 October. Consensus estimates are for a 0.8 gain, but recent mortgage data suggests potential for greater upside.