Signs of Budget Agreement Do Not Make Dollar Very Strong

There were signs that US politicians may reach an agreement about the budget. The dollar attempted to profit from the news, but was unable to demonstrate any real strength against the euro and the Japanese yen, though rallied against the Great Britain pound.
US Senate Budget Committee Chairman Senator Patty Murray and House Budget Committee Chairman Representative Paul Ryan introduced a budget plan that would prevent automatic spending sequestration. If the Congress votes for the bill than the United States will be able to avoid another government shutdown. Resolution of the budget issues should increase chances for quantitative easing tapering by the Federal Reserve.
The dollar rose against the sterling after Bank of England member Martin Weale mentioned “sharp and unexpected fall in actual inflation”. Specialist said that the UK currency also weakened against the greenback due to profit-taking after the impressive rally.
EUR/USD rose from 1.3759 to 1.3786 and USD/JPY went down from 102.83 to 102.43 as of 23:07 GMT today. GBP/USD declined from 1.6443 to 1.6376.

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