Euro Steady Even As Investor Sentiment Slips
The euro remained steady above $1.35 on Tuesday as the US debt showdown dragged on. The US government remained shut down on Monday and looked to be in for yet another day of political stalemate in the early hours of Tuesday.
Although most are expecting Congress to come to an agreement before the October 17th debt ceiling deadline, the possibility of a default has weighed on the dollar and created caution in the markets. If the US government cannot agree on the nation's budget before the deadline, analysts expect to see unprecedented fallout in markets across the world.
Healthcare reforms have been the sticking point for both sides as Republicans insist on including terms for cuts alongside the new budget, while the President has refused to approve any proposal with strings attached.
Data from the Eurozone showed that sentiment dipped in October after posting impressive gains in September. Reuters, reported that the Sentix index which measures investor morale fell to 6.1 points from 6.5 points in September. The figure also disappointed analysts who had predicted a rise to 8.0 points.
Although the data fell below expectations, September's data was extremely high; the second strongest increase since 2003 when the index was introduced. Many see October's dip as markets normalizing, meaning the eurozone recovery could still be on track.
In the report, Sentix said investors surveyed between October 2 and October 5 were upbeat about their current situation, an improvement from reports during the same month in 2011. However, their view of the future slipped with the sub index falling to 21.8 in October from 23.0 a month ago.
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