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Price movements on Friday suggested traders were becoming confident that a deal could be struck by lawmakers in Washington in time to avert a US default, but now that the weekend has come and gone with no news of such a deal, that confidence is looking shaky.
The US dollar has weakened against most of its major peers, slipping 0.13% against the Japanese yen and 0.30% against the Swiss franc, while EUR/USD has advanced 0.24%. The dollar index, a measure of the dollar’s strength against a basket of six major currencies, dropped 0.15%.
The dollar’s losses were even more pronounced earlier in the day, but were pared back after President Obama invited leaders from Congress to the White House for talks in which he is expected to restate his wish for legislation to end the shutdown and raise the debt ceiling. President Obama will meet with House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell at 3pm in Washington (8pm BST).
Although Senate Majority Leader Harry Reid has said that he believes he is getting closer to a deal in talks with Minority Leader Mitch McConnell, nothing concrete has emerged thus far.
The dollar is under pressure because so little time remains before 17 October, the date estimated by Treasury Secretary Jack Lew as when the Treasury will have exhausted its extraordinary measures and will be reliant on around $30 billion cash in hand, plus incoming tax revenue, to cover the country’s expenditures, which can reach as high as $60 billion on some days.