Tuesday October 8, 2013 - 00:43:50 GMT
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Reuters - www.reuters.com
FOREX NEWS -Dollar skids to 8-mth low vs yen as no end in sight to US impasse
* Dollar remains under pressure after 200-day moving average breaks
* Markets "not positioned for worst-case scenario" of U.S. default-strategist
* Euro underpinned by hopeful signs that Greece could emerge from recession
By Lisa Twaronite
TOKYO, Oct 8 (Reuters) - The continuing U.S. fiscal standoff pushed the dollar to a fresh eight-month low against the yen in early Asian trading on Tuesday and kept it under pressure against a basket of major currencies.
Although a breakthrough still appeared elusive, a few hopeful signs emerged on Monday, with President Barack Obama saying he would accept a short-term increase in the nation's borrowing authority to avoid a default. An influential Senator is also said to be floating a plan to cut federal spending and reform the U.S. tax code as part of a broader deal.
The dollar fell to 96.55 yen, its lowest since Aug. 12, before recovering to 96.65 yen. Market participants cited options barriers around 96.50 yen and at 96 yen, with the pair trading below its 200-day moving average -- now at 96.72 -- after breaching that technical support level.
"It's a bit frustrating, because people want to trade on those technicals, but it's really being driven by external factors and if that [the U.S. situation] were to rectify itself, we'd probably be right back where we were at 98.50, 99," said Bart Wakabayashi, head of forex at State Street Global Markets in Tokyo.
Obama's press secretary, Jay Carney, told reporters the president would be willing to accept a short-term debt ceiling increase in order to get past the potential crisis date of Oct. 17. The government hits its $16.7 trillion borrowing limit then, and in a worst-case scenario, it could default on its obligations.
"There's really not a lot of panic going on with the U.S. situation. I think everyone's expecting they'll figure it out, do the right thing," Wakabayashi said, adding that "the market is not positioned for a worst-case scenario."
The dollar index fell 0.1 percent to 79.903, creeping back toward its eight-month low of 79.627 hit on Thursday last week.
The euro was steady from late U.S. levels at $1.3578, not far from an eight-month high of $1.3645 touched on Thursday.
The European currency was underpinned by news from Greece that the struggling nation will emerge from six years of recession next year, according to a draft budget forecast on Monday.
© Thomson Reuters 2011. All rights reserved.
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