Focus Shifts to US Debt Ceiling

Positive US Economic Data

The US Dollar on Thursday, rose against other major currencies after the US weekly jobless claims dropped unexpectedly. According to the report released by the Labor Department, initial jobless claims in the week ending September 21 fell by 5,000 to a seasonally adjusted 305,000 as compared to the previous week’s revised figure of 310,000. The jobless claims were lower than 319,000 that economists had expected.

In other economic data release on Thursday, a final reading of the US GDP showed that the economy grew at 2.5% in the second quarter of 2013, as was estimated in the preliminary release. The unrevised second quarter GDP figure was below the consensus projection of 2.7%.

Meanwhile, the National Association of Realtors (NAR) report that the US pending home sales index registered a third month of declines in August and fell 1.6% to 107.7 from a downwardly revised 109.4 in July. According to NAR the recent lower level of levels of existing-home sales was due to higher interest rates and home prices, among other factors.

Spotlight on US Debt Limit

Gains for the US Dollar, however, remained muted as US lawmakers struggle to pass bills for raising government debt ceiling, currently set at $16.7 trillion, in order to keep the government running beyond September 30 and avert a historic default. Republicans are in dispute with the government over fiscal policy and are proposing of spending cuts for raising the debt ceiling.

According to the US Treasure Secretary, Jacob Lew, and the Congressional Budget Office, the Treasury is likely to exhaust the borrowing authority and cash on hand between mid-October and the end of October, increasing the probability of government defaulting.

On Thursday, US debt ceiling concerns continued to weigh on investor sentiment, offsetting better-than-expected US jobless claims. With the prevailing uncertainty over the fiscal uncertainty in the US, investors are likely to remain on the sidelines. However, a deal to raise the debt ceiling would ultimately be beneficial for the US Dollar

• Original Article: Admiral Markets and hyper link Admiral Markets with http://www.admiralmarkets.com/