U.S. dollar rises on debt deal hopes

NEW YORK (Oct 15)   The U.S. dollar rose against most major currencies on Tuesday as U.S. lawmakers continued to work on a deal to raise the debt ceiling and reopen government.

The Australian dollar, meanwhile, hit a nearly four-month high after the release of minutes from the Reserve Bank of Australia.

In the U.S., Senate Majority Leader Harry Reid on Tuesday reiterated that a deal could be reached this week. The Senate is working on a deal that would fund the government through Jan. 15 and lift the debt limit until Feb. 7. House Republicans will reportedly push a different bill with the same dates that would add a two-year delay of the medical-device tax and ban the Treasury from using extraordinary measures.

The ICE dollar index, which measures the greenback against a basket of six rival currencies, rose to 80.618 from 80.296 in late North America trade on Monday.

The WSJ Dollar Index, a rival measure that pits the dollar against a broader basket, advanced to 72.89 from 72.69 late the prior day.

The U.S. will run out of borrowing authority on Oct. 17, unless Congress agrees on measures to lift the debt ceiling. A lack of a deal to raise the debt limit by that date would leave the Treasury with $30 billion in cash to pay its bills.

But the bigger problem is Nov. 1, when several payments are due, said Richard Franulovich, chief currency strategist for the northern hemisphere at Westpac Banking Corp. “It’s a cataclysmic date,” he said.

The British pound  slipped to $1.5948 from $1.5991. The Office for National Statistics said the U.K. consumer-price index rose 2.7% year-on-year in September, above expectations of a 2.6% print.

The euro fell to $1.3492 from $1.3566 on Monday, while the dollar bought ¥98.55, little changed from ¥98.54.