SINGAPORE, Oct 17:
The dollar set a three-week high versus the yen on Thursday ahead of a pending vote in the U.S. House of Representatives that could bring Washington’s fiscal standoff to an end and avert the risk of a U.S. Default.
The dollar held steady on the day at 98.79 yen after having touched a high of 99.01 yen, the greenback’s strongest level against the yen since late September.
Traders said earlier that dollar-selling interest had been strong at levels near 99.00 yen.
With the U.S. Senate having approved the deal to end the fiscal impasse, focus now is on a pending vote in the U.S. House of Representatives.
Gains in the dollar versus the yen were likely tempered by caution ahead of the House vote, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
If the House approves the legislation, the dollar may see some moderate gains versus the yen, Okagawa said, noting an end to the U.S. Fiscal standoff may not be enough to trigger a sharp climb in the greenback.
‘The dollar could head a bit higher against the yen, but I don’t get the sense that the dollar will head for a rally above 100 yen and keep heading sharply higher from there,’ he said.
In the wake of the U.S. Fiscal impasse and government shutdown, it may take a while before dollar-buying backed by an upbeat view on the U.S. Economy takes hold, Okagawa added.
The deal approved by the Senate offers only a temporary fix and does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats. It funds the government until Jan. 15 and raises the debt ceiling until Feb. 7, so Americans face the possibility of another government shutdown early next year.
In addition, the recent U.S. Debt crisis has taken talk of the Fed’s tapering its stimulus off the table for now, as the government shutdown since the start of this month has hurt consumer sentiment.
The dollar index, which tracks the greenback against a basket of currencies, held steady at 80.437 after touching a high of 80.754 in the previous session, its highest level in about a month.
The euro held steady against the dollar near $1.3536, staying above a two-week low of $1.3472 hit on Wednesday. (AGENCIES)
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