Dollar Rises on Signs of Agreement Among US Lawmakers

US President Barack Obama accepted the deficit reduction plan of the bipartisan group of senators, bringing hope for resolution of the deadlock in discussion an increase of the debt ceiling. The US dollar rose against the Japanese yen and trimmed its losses versus the euro.

The group led by Republican Senator Saxby Chambliss of Georgia and Senator Mark Warner of Virginia proposed plan for an immediate reduction in spending by $500 billion followed by a longer-term cuts and $1 trillion of tax increases. The agreement between the President and some of the senators brought hope that the US politicians would find a way to reduce the nation’s debt.

Republican Senator Tom Coburn of Oklahoma was cautiously optimistic:

In the next 24 hours, you’re going to see a significant portion of the Senate come behind this — bipartisan — maybe 60 members, and let’s see how things roll. This doesn’t solve our problems, but this creates the way forward where we can.

There are plenty of senators who would likely oppose the proposed plan and the US debt problems are far from being resolved.

EUR/USD traded at 1.4156 after climbing from 1.4112 to 1.4216, while USD/JPY advanced from 79.03 to 79.08 as of 21:14 GMT today.

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