The US dollar, which has benefited from angst around the statutory borrowing limit, will be in focus as another week of trading begins at 5 a.m. Monday in Sydney. Liquidity is set to be thin with US and UK markets closed Monday for national holidays, although futures contracts referencing US Treasuries and the S&P 500 Index will trade.
Investors had flocked to safety in recent weeks as the so-called X-date – the day on which the Treasury expected it wouldn’t be able to meet all of its obligations – rapidly approached. House Speaker Kevin McCarthy said he will talk with President Joe Biden again on Sunday and line the bill up for a vote on Wednesday.
“Markets should breathe a sigh of relief, with the dollar likely to soften a tad as the debt ceiling imbroglio is finally resolved,” said Chang Wei Liang, a strategist at DBS Group Holdings in Singapore. “The deal appears well-balanced between reducing spending while not jeopardizing growth, and is likely to be a small positive for US Treasuries.”
Somewhat ironically, the prospect of a US default has been a boon for the dollar, with the US dollar advancing against all of its Group-of-10 peers this month.
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