Trading in
the US dollar was relatively choppy yesterday as markets continued to ponder
the outcome over Thursday’s deadline to raise the US debt ceiling.

Common view
still seems to be that the US will manage to avert a default but given the
large impact Thursday’s risk event poses, investors appear to be sitting on the
side lines until a decision is made.

Trading in
the US dollar was relatively choppy yesterday as markets continued to ponder
the outcome over Thursday’s deadline to raise the US debt ceiling.

Common view
still seems to be that the US will manage to avert a default but given the
large impact Thursday’s risk event poses, investors appear to be sitting on the
side lines until a decision is made.

Credit rating
agency Fitch expressed their concerns yesterday after putting the US’s AAA credit
rating on negative watch due the government’s inability to raise the debt
ceiling in a timely manner.

The Senate
are set to put a proposal forward this morning (US time) that would fund the
government through January 15^th 2014, and would also suspend the
U.S. debt limit until February 7th 2014.

The pound
drew support yesterday as the economy’s rate of inflation surpassed
expectations by remaining at 2.7% instead of falling to 2.6%.

The euro fell
yesterday following mixed ZEW survey on economic sentiment from Germany and the
euro zone as a collective. German economic sentiment rose to the highest since
April 2010 but euro zone economic sentiment fell shy of expectations.

Overnight the
New Zealand rate of inflation rose beyond expectations from 0.7% in the second
quarter to 1.4% in quarter three. The data could put upward pressure on the
potential to hike interest rates in New Zealand; thus making the currency a
higher yield attraction – we could well start to see more dollar demand.

The pound has
been boosted further this morning as the number of unemployed people in
September fell by 41,700. Although the unemployment rate remains at 7.7%, the
figure should provide some encouraging reading for the state of the UK economy
as well as giving a good gauge as to when interest rates could rise.

Euro zone
inflation has fell in line with expectations this morning as well coming in at
1.1%.

The rest of
the day is vacant of any other fundamental data but in the evening we are
expecting a speech from Mario Draghi from the ECB and the Fed’s beige book is
set to publish a report on the state of the US economy – which given current
conditions may not be too positive.

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