Dollar recovers as Washington deal looks likely

Published: 16 Oct at 9 AM Tags: Euro, Dollar,

The US dollar is up against the yen as it looks likely that Senators in Washington will come to a deal to avoid a debt default.

The greenback rose 0.4 per cent against its Japanese rival to reach 98.50 yen. Yesterday the dollar hit a low of 98.07 as Fitch’s put the US on a credit watch rating and the House of Representatives failed to come up with a plan that would pull the US away from possible default.

However, President Barack Obama is due to meet with Jacob Lew, Treasury Secretary, today to discuss the government’s financial problems. The dollar index is currently sitting at 80.494 after earlier hitting a high of 80.703.

Most analysts believe that a deal to push the debt ceiling and get the government open again by next Monday will be enough to avoid a debt default.

The euro has recovered from a low of $1.3478 hit yesterday to remain level at $1.3524. If the US government was to default on its debts, the reverberations would be global. However, fingers are crossed that the boys in Washington will be sensible enough not to let this happen.