USD/JPY at 98.40 as U.S. Debt Talks Ease Default Fear

The dollar held firm on Tuesday, hitting a two-week high against the yen as top U.S. senators signalled they could soon reach a bipartisan deal to reopen the government and avert an immediate debt default.

Moves in major currencies were mostly modest, however, as investors remained wary of further political bickering. The exception was the Australian dollar, which jumped to a four-month high, getting an extra lift from meeting minutes showing Australia’s central bank was in no hurry to cut interest rates.

“Excessive pessimism about the U.S. has receded,” said Kyosuke Suzuki, director of forex at Societe Generale. “People have been building dollar long positions, giving consideration to the risk of not having dollars when a deal will eventually be signed.”

Reuters

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