USD/JPY at 98.30 as U.S. Debt-Limit Talks Continue

The dollar halted three days of gains versus the yen as House Majority Leader Eric Cantor said “talks will continue” between Republicans and President Barack Obama on a debt-limit increase and government shutdown.

The yen briefly gained versus major peers after the New York Times reported Obama had rejected a Republican proposal for a short debt-ceiling increase. Japan’s haven currency pared the advance as statements from the White House and Republican leaders indicated no decision had been reached. Australia’s dollar was headed for back-to-back weekly gains against the greenback after the yield premium its two-year debt offers over the U.S. climbed to its highest since April.

“An agreement on the debt ceiling is seen as a risk-on catalyst, while the opposite is risk off — it’s as simple as that,” said Daisaku Ueno, the chief currency strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “It’s convenient to use dollar-yen to take part in this kind of swing trade.”


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