Vlad Demochko
Jacob Lew, US Secretary to the Treasury, held a speech on the budget crisis yesterday. During the speech he was going to inform President Obama and top-ranking officials including leading congressmen about the threat of a US default that is hanging over the USA right now. The press secretary of the White House told reporters about that.
The meeting was scheduled for the second part of the day. It should be reminded that the Republicans, who are in control of the House of the Representatives, promote opposing views and are against the existing 2014 draft budget offered by Obama’s administration. They are also against increasing the US debt ceiling. According to the Treasury, October 17th is the deadline. This is the day when the governmental credit limit will be exceeded. If the Congress fails to approve a new portion of Treasury bonds, the USA will eventually face a default on its debt.
It should be noted that due to the fact that the government is getting short of financing, on October 1st some public institutions and agencies were furloughed. Meanwhile, 24/7 Wall St, a famous blog on finances, named 10 firms that will see their stocks gaining value during this budget and debt ceiling uncertainty. The list includes Altria Group (Marlboro) and Reynolds American (Camel) as well as Anheuser-Busch InBev (Budweiser) and AOL.
US Dollar After October 1st
The US Dollar index showed the biggest quarterly decline since 20111 amid market panic. All that debt ceiling uncertainty along with budget disputes and the Fed’s indecision to taper QE3 exert pressure on the American currency.
At this point, the DXY is trading around local lows like 79,85. The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of DXY:
No Default Ahead
According to Masterforex-V Academy, everyone seems to be anticipating a US Default these days. The Republicans and the Democrats are still playing political games, trying to turn their own economic models into a strategic model for the USA. They manipulate the problem in order to try to reach their goals. Still, eventually they will approve the budget and raise the debt ceiling at the 11th hour…
Vlad Demochko
