By Wanfeng Zhou
NEW YORK, Oct 8 (Reuters) - The dollar hovered near its
recent eight-month low against major currencies on Tuesday as
U.S. lawmakers struggled to find a solution to the country's
budget and debt problems that could potentially lead to a
Against the yen, the dollar edged higher from a two-month
low although it gave up some of the gains. Analysts said the
U.S. currency will likely stay under selling pressure as long as
the standoff in Washington is unresolved.
The dollar index, which measures the U.S. currency's
value against a basket of currencies, was little changed at
79.977. It hit an eight-month low of 79.627 last Thursday.
'With the U.S. government still shuttered, traders and
investors are unwilling to push the market too heavy in either
direction,' said Scott Smith, market analyst at Cambridge
Mercantile Group in Calgary, Alberta.
President Barack Obama told Republican Speaker of the House
of Representatives John Boehner on Tuesday he would be willing
to negotiate with Republicans once the U.S. government is
re-opened and the threat of a default is lifted, the White House
Republican House Speaker John Boehner renewed calls to
President Barack Obama to have a conversation with his party at
a press conference on Tuesday morning. Boehner, flanked by
Republican leadership, said 'there is no line in the sand' drawn
by his party over fiscal negotiations.
With the partial U.S. government shutdown in its second week
and only nine days left for Congress to raise the U.S. debt
ceiling, Obama said he would accept a short-term increase to
avoid a default.
Congress must reach a deal by Oct. 17, when Treasury
Secretary Jack Lew has said the government will run out of money
to pay its bills.
'There are a few signs of willingness from the White House
and Congress to open up to more constructive discussions, which
supports the view that some kind of deal will be reached and has
calmed investors' fears,' said Niels Christensen, currency
strategist at Nordea.
But he added: 'The risk is to the downside for the dollar as
long as we don't have an agreement ... There may be some more
euro buying if it goes above last week's high.'
The dollar rose 0.2 percent to 96.90 yen, having
dropped to 96.55 yen in Asian trade, its lowest since Aug. 12.
It then recovered to trade back above chart support at 96.72
yen, its 200-day moving average.
The euro was little changed at $1.3575, pulling away
from an eight-month high of $1.3645 touched on Thursday. It
showed little reaction to data which showed German industry
orders unexpectedly fell in August although the trend was still
Fears of a U.S. default drove interest rates on U.S.
one-month government debt to their highest levels since August
2011. The International Monetary Fund said a U.S. debt default
is an unlikely event, but one that could have catastrophic
consequences for the world.
China and Japan, the United States' biggest creditors, are
increasingly worried the U.S. government shutdown and standoff
over the debt ceiling could wreak havoc on their trillions of
dollars of investments in U.S. Treasury bonds.
The impasse has distracted investors from what had
previously been their main preoccupation: the timing of the U.S.
Federal Reserve's reduction of its stimulus, which should lift
On Wednesday, the Fed will release minutes from its policy
meeting last month, when it shocked markets by deciding not to
begin reducing its $85 billion a month bond-purchase program.
The higher-yielding and riskier Australian dollar
rose after upbeat surveys on Australian employment and business
confidence. It last traded up 0.1 percent at $0.9441, paring
gains as stocks came under pressure and risk appetite decreased.
(Additional reporting by Jessica Mortimer in London: Editing by
((Wanfeng.Zhou@thomsonreuters.com)(+1 646 223 6304)(Reuters
(Currency bid prices at 9:36 a.m. EDT (1336 GMT). All data taken from Reuters calculated from the levels at 4:30 p.m.(2030 GMT) in the previous New York session. Last US Close Pct YTD Pct 2012 Oct. 7 Change Change Close ------------------------------------------------------------- Euro/dlr 1.3587 1.3581 +0.04 +2.98 1.3194 Dlr/yen 97.070 96.690 +0.39 +11.91 86.740 Euro/yen 131.88 131.28 +0.46 +15.23 114.45 Dlr/swiss 0.9043 0.9028 +0.17 -1.22 0.9155 Stg/dlr 1.6115 1.6095 +0.12 -0.84 1.6251 Dlr/cad 1.0329 1.0311 +0.17 +4.11 0.9921 Aus/dlr 0.9465 0.9427 +0.40 -8.93 1.0393 Euro/swiss 1.2291 1.2260 +0.25 +1.79 1.2075 Euro/stg 0.8428 0.8434 -0.07 +3.87 0.8114 Nzd/dlr 0.8317 0.8301 +0.19 +0.41 0.8283 Dlr/Norw 5.9543 5.9668 -0.21 +7.03 5.5630 Euro/Norw 8.0923 8.1049 -0.16 +10.24 7.3)
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