Market Overview

Euro Loses Ground To Dollar

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The dollar gained against the euro on Wednesday as the US debt deadline loomed just one day away.

The common currency traded at $1.3515 at 5:15 GMT on Wednesday morning as investors looked to the US government for a last minute deal that will reopen the government and avoid a sovereign default.

Reuters reported that the White House announced that the Senate's discussions have been beneficial, but that the government was still struggling to complete a deal.

Related: Market Primer: Wednesday, October 16: Markets Wobble On Debt Deal Setback

The House of Representatives was unable to reach a consensus on how to end the stalemate over the US federal budget. Despite the infighting, House Speaker John Boehner has said he and his peers will not allow a default.

Although most are expecting to see US lawmakers hammer out a last minute deal, many see the dollar falling under pressure in the coming weeks as the agreement will likely postpone the budget argument rather than resolve it. Without a clear resolution, the US government is considering a short term extension for the US' borrowing authority. In this scenario, the nation would avoid defaulting on its loans, but will face the same issues later in the year.

The dollar's gains are expected to be short lived regardless of whether or not a deal is made as many analysts say the two week government shutdown has done lasting damage to the US' economic recovery. After months of speculation that the Federal Reserve will taper its bond buying plan, most now expect the bank to continue with its stimulus well into 2014 to help get the nation's economy back on track.

Posted-In: John BoehnerNews Eurozone Commodities Forex Global Federal Reserve Markets Best of Benzinga


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