US dollar fell to lower levels against the Japanese yen on Tuesday, despite hopes that US policymakers were about to reach an agreement on the US budget as soon as today, that would raise the debt ceiling and end the already 15-day government shutdown.
Having reached a session high at 98.71 during the Asian trade session, USD/JPY cross slipped lower to trade at 98.43 at 8:14 GMT, losing 0.15% for the day. Support was likely to be received at October 11th low, 97.91, while resistance was to be met at September 27th high, 98.98.
The greenback advanced to session highs against the Japanese currency, after Senate Majority Leader Harry Reid said on Monday that a “tremendous progress” had been made through negotiations over the US fiscal matter. The approached agreement would suspend the US debt ceiling through February 7th 2014, provide government funding through January 15th and also require a House-Senate budget conference by December 13th, according to an anonymous Senate source familiar with the debates. However, there appeared to be two potential obstacles to an agreement. First, a single senator would be able to use procedural tactics in order to push a final vote past the October 17th lapse in nation’s borrowing authority. Texas Republican Senator Ted Cruz would not rule out stalling maneuvers, as he wanted to see the details of the plan. And secondly, House Republicans, who have demanded major changes to US President Barack Obama’s health-care law, could resist any proposal, which may not meet most of their priorities.
Any deal on the budget matter still would have to be approved by the House of Representatives, while Speaker John Boehner would have to make a decision whether to allow a vote or demand cuts in federal spending.
Meanwhile, in Japan, it became clear that the final value of the index, gauging industrial production in the country, decreased 0.9% in August on a monthly basis, widening the drop, recorded a month ago, 0.7%. The annual performance of the index showed a 0.4% decrease in August, after another 0.2% drop in July.
Elsewhere, the yen was gaining against the euro, as EUR/JPY cross lost 0.15% on a daily basis to trade at 133.49 at 8:36 GMT. GBP/JPY pair was steady, dipping a mere 0.01% to trade at 157.57 at 8:37 GMT.