By Dow Jones Business News, October 07, 2013, 02:44:00 AM EDT
--Dollar edges lower against yen on concerns over U.S. shutdown and debt ceiling debate
--Analysts warn prolonged deadlock could hurt risk appetite, shares prices
By Alexander Martin
The dollar edged lower against the yen during Asian trading Monday as uncertainty over the U.S. government shutdown
and the upcoming debate on the debt ceiling continued to weigh on sentiment.
As the shutdown entered its second week, Asia remained focused on whether the Congress would raise the debt ceiling by
Oct. 17. A failure to do so would mean the U.S. begins failing to meet its financial commitments.
Traders said the dollar's decline would likely be gradual, however, since market participants are reluctant to bet
aggressively against it not knowing when lawmakers might reach a compromise, reinvigorating the currency.
House Speaker John Boehner (R., Ohio) said Sunday he wouldn't bring up bills to fully reopen the government or
increase the country's borrowing limit unless Democrats agree to broader talks on trimming the deficit. That led to
fears that Congress and President Barack Obama could fail to reach a deal by Oct. 17.
If the U.S. debt ceiling is lifted in time, however, the dollar will likely rise against the yen and European
currencies, and fall versus higher-yielding ones like the Australian and New Zealand dollars, said Masafumi Yamamoto,
market strategist at Praevidentia Strategy.
Once the ceiling is raised, U.S. stocks and Treasury yields will likely recover as the U.S. economy improves, Mr.
Yamamoto said. "The sooner the ceiling is lifted, the stronger the price actions would be."
But U.S. shares prices could suffer if the deadlock continues, triggering falls in emerging-market shares and
eventually the Nikkei Stock Average, said Junichi Ishikawa, market analyst at IG Securities in Tokyo.
"Initially there were expectations the shutdown would end in two or three days ... but now, there are possibilities it
could surpass the 26 days the government shut down last time in late 1995," he said.
If the chances of a U.S. downgrade and default increase, financial markets could see the deadlock hampering the U.S.
economic recovery, further damaging risk appetite, he said.
As of 0450 GMT, the dollar was at Y97.15 from Y97.25 late in New York trading. The euro was at $1.3564 from $1.3565
and at Y131.73 from Y131.88.
The WSJ Dollar Index, which tracks the dollar against a basket of currencies, was at around 72.423 from a close of
around 72.495 late Friday in New York.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
USD/JPY Japan 97.13-16 97.19-25 -0.08 97.33 97.04 +11.99
EUR/USD Euro 1.3562-64 1.3563-67 -0.01 1.3574 1.3562 +2.79
GBP/USD U.K. 1.6030-34 1.6022-26 +0.05 1.6048 1.6018 -1.32
USD/CHF Switzerland 0.9046-50 0.9064-70 -0.21 0.9070 0.9040 -1.14
USD/CAD Canada 1.0304-08 1.0291-304 +0.08 1.0306 1.0294 +3.82
AUD/USD Australia 0.9420-24 0.9433-38 -0.14 0.9449 0.9418 -9.34
NZD/USD New Zealand 0.8293-98 0.8316-22 -0.28 0.8323 0.8286 +0.21
EUR/JPY Japan 131.74-78 131.84-92 -0.09 132.05 131.64 +15.12
Source: ICAP PLC
Kosaku Narioka contributed to this article.
Write to Alexander Martin at email@example.com
Corrections & Amplifications
This item was corrected at 0738 GMT because the original misstated the change in the WSJ Dollar Index, and the day of
the New York close, in the final paragraph. The WSJ Dollar Index was at around 72.423 from a close of around 72.495 late
Friday in New York.
(END) Dow Jones Newswires
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