The final step to reopen the government and avoid hitting the debt ceiling was made by US President Barrack Obama, that signed the legislation passed in both houses of Congress. It came as the date turned to October 17th -the debt ceiling deadline. Politicians did what they always do: cut a deal in the last moment.
After the initial rise, the dollar began retreating and the trend continues. A lot of damage has been done to the US, especially in terms of confidence. With a new crisis scheduled in early 2014, it’s hard to see how the economy breaks away from the slow growth pattern, and how fast the Fed ends QE.
After 16 days of shutdown, the government is open for business for almost 3 months, until January 15th. This is also when the second round of the infamous “sequester” kicks in. A committee including members of both the House and the Senate will try to reach a budget.
The dreaded debt ceiling has been extended to February 7th, with a potential to use “special measures” and to avoid a default until March. Given past experience, it’s hard to see how politicians resolve the problems ahead of time, especially with the Christmas / New Year’s holidays.
There are still no dates for the release of all the pending economic indicators, including the all-important Non-Farm Payrolls.
Further reading: A Stop Gap Debt Ceiling Solution Would be a Drag for USDGet the 5 most predictable currency pairs