Asian equities opened the week lower as concern over US persisted. House speaker Boehner said over the weekend that, "the votes are not in the House to pass a clean debt limit." Finger pointing continued as he warned, "the nation’s credit is at risk because of the administration’s refusal to sit down and have a conversation." Treasury Secretary Lew criticized that the "Congress is playing with fire" and warned, "there is no option that prevents us from being in default if we don’t have enough cash to pay our bills." Lew has already said before that US will exhaust the "extraordinary measures" to keep debt below the $16.7T limit on October 17. And, the CBO estimated that US would be unable to pay its bills sometime between October 22 and 31.
Technically, the dollar index made a temporary low at 79.63 last week and we'd expect some sideway trading in near term. Nonetheless risk remains on the downside as long as 80.65 resistance holds. Current fall is still in favor to extend to key cluster support zone at 78.60, with 50% retracement of 72.69 to 84.75 at 78.72.
The main question, though, remains in the larger picture. 78.60/72 must be defended well for the long term up trend from 72.69 to stay intact. A strong rebound from current level, with a decisive break of 80.65 resistance will argue that the index is merely staying in a sideway consolidation pattern between 78/85 range. However, decisive break of 78.60/72 will confirm trend reversal and will turn the medium term outlook bearish.
On the data front, Japan will release BoJ monthly report as leading indicator. Swiss will release foreign currency reserves. Eurozone will release Sentix investor confidence and Q2 GDP final. Canada will release building permits. No US data is scheduled due to government shutdown.
Latest CFTC data showed further improvement in Euro net positions on September 24, comparing to the prior week. Euro net longs jumped to new 2013 high at 65.8k, more than double of prior week's 31.9k. Sterling positions turned net long to 1.2k, from -6.3k net short. Yen net short was relatively unchanged at -92.8k. Aussie net shorts rose slightly back to -34.8k. And, the Canadian dollar net short dropped to -5.7k.