3 Oct 2013
Flash: Republican fall-back and 'risk on' return? - RBS
FXstreet.com (Barcelona) - The market may return to 'risk appetite' mode sooner-than-expected, according to Greg Gibbs, FX Strategist at RBS, who assumes the Republicans are starting to realize they will get little political gain from the current stand-off on closing down the government, thus risk on and sell USD trades predicting a Republican fall-back is the way to go, Gibbs says.
Key Quotes
"While we await news from US Congress on first a continuing resolution and second how they intend to move spending (if it restarts) beyond the approximate 17 October debt ceiling deadline, not to mention make interest payments, risk appetite will remain contained."
"In 2011 it required a large fall in US equities and fear of significant economic fallout to make Congress see the urgency to do a deal. This time a deal may be closer with some Republicans beginning to see little political capital to be gained from a prolonged government shut-down, but increasing risk they are apportioned to greater blame for this crisis."
Key Quotes
"While we await news from US Congress on first a continuing resolution and second how they intend to move spending (if it restarts) beyond the approximate 17 October debt ceiling deadline, not to mention make interest payments, risk appetite will remain contained."
"In 2011 it required a large fall in US equities and fear of significant economic fallout to make Congress see the urgency to do a deal. This time a deal may be closer with some Republicans beginning to see little political capital to be gained from a prolonged government shut-down, but increasing risk they are apportioned to greater blame for this crisis."