Investing.com - The dollar rose against the yen on Tuesday after hopes began to grow that U.S. politicians will negotiate a spending plan to avoid hitting the debt ceiling and running the risk of default later this month.
In U.S. trading on Tuesday, USD/JPY was trading at 97.01, up 0.31%, up from a session low of 96.67 and off a high of 97.25.
The pair was likely to find support at 96.57, Monday's low, and resistance at 98.72, last Tuesday's high.
Despite a government shutdown in its second week, markets grew a little less worried that the deadlock will affect negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by Oct. 17, after which the risk of default rises.
While the White House and congressional Republicans were still unable to agree on terms to fund the government, talk both sides are quietly making plans to raise the debt ceiling and avoid default sparked some relief demand for the dollar on Tuesday and sparked a round of profit taking for the yen, a safe-haven of choice during the U.S. fiscal impasses.
Gains were somewhat limited as the impasse did drag on .
Earlier Tuesday, President Barack Obama said he saw no serious proposals from Republicans needed to end the impasse, which sent stocks falling though the dollar fared better.
The White House insists Republicans open the government before addressing fiscal issues, while many Republicans want the president's healthcare reform law scrapped or delayed before doing as such, with a stalemate resulting.
IMF Chief Economist Olivier Blanchard said earlier that a prolonged failure to raise the U.S. debt ceiling would "almost certainly derail the recovery" and warned the U.S. to slow the pace of its deficit reduction program.
In its latest World Economic Outlook report, the IMF downgraded its forecasts for the global economy, saying it now expects growth of 2.9% this year, down from 3.1% in July. It expects growth of 3.6% in 2014, down from 3.8%.
The euro, meanwhile, saw support after the IMF said it expected the euro zone economy to contract by 0.4% this year, less than 0.5% it forecast in July. It left its 2014 growth forecast unchanged at 1%.
Also Tuesday, data showed that German factory orders unexpectedly fell 0.3% in August following a 1.9% drop in July. Analysts had been expecting a gain of 1.2%.
The yen was down against the pound and down against the euro, with GBP/JPY up 0.16% and trading at 155.93 and EUR/JPY trading up 0.21% at 131.59.
On Wednesday, the Bank of Japan is to release monetary policy meeting minutes, which provide insights into economic conditions from the bank’s perspective. Japan is also to produce data on preliminary machine tool orders.
In U.S. trading on Tuesday, USD/JPY was trading at 97.01, up 0.31%, up from a session low of 96.67 and off a high of 97.25.
The pair was likely to find support at 96.57, Monday's low, and resistance at 98.72, last Tuesday's high.
Despite a government shutdown in its second week, markets grew a little less worried that the deadlock will affect negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by Oct. 17, after which the risk of default rises.
While the White House and congressional Republicans were still unable to agree on terms to fund the government, talk both sides are quietly making plans to raise the debt ceiling and avoid default sparked some relief demand for the dollar on Tuesday and sparked a round of profit taking for the yen, a safe-haven of choice during the U.S. fiscal impasses.
Gains were somewhat limited as the impasse did drag on .
Earlier Tuesday, President Barack Obama said he saw no serious proposals from Republicans needed to end the impasse, which sent stocks falling though the dollar fared better.
The White House insists Republicans open the government before addressing fiscal issues, while many Republicans want the president's healthcare reform law scrapped or delayed before doing as such, with a stalemate resulting.
IMF Chief Economist Olivier Blanchard said earlier that a prolonged failure to raise the U.S. debt ceiling would "almost certainly derail the recovery" and warned the U.S. to slow the pace of its deficit reduction program.
In its latest World Economic Outlook report, the IMF downgraded its forecasts for the global economy, saying it now expects growth of 2.9% this year, down from 3.1% in July. It expects growth of 3.6% in 2014, down from 3.8%.
The euro, meanwhile, saw support after the IMF said it expected the euro zone economy to contract by 0.4% this year, less than 0.5% it forecast in July. It left its 2014 growth forecast unchanged at 1%.
Also Tuesday, data showed that German factory orders unexpectedly fell 0.3% in August following a 1.9% drop in July. Analysts had been expecting a gain of 1.2%.
The yen was down against the pound and down against the euro, with GBP/JPY up 0.16% and trading at 155.93 and EUR/JPY trading up 0.21% at 131.59.
On Wednesday, the Bank of Japan is to release monetary policy meeting minutes, which provide insights into economic conditions from the bank’s perspective. Japan is also to produce data on preliminary machine tool orders.