Flash: Congress lets go the choke hold - positive for risk, negative for the USD - RBS

FXstreet.com (Barcelona) - As the US government moves closer to a potential debt deal/government re-open compromise, even if such agreement is to be re-negotiated before year-end, it should be enough good news to ease the risk off environment, leading to a decline in the USD medium term, notes Greg Gibbs, FX Strategist at RBS.

Key Quotes

"The US keeps the pattern of repeatedly choking itself, growth remains sub-trend and the Fed prolongs its quantitative policy easing. As such, the medium term assessment is that the fiscal crisis is more negative for the USD than it is for global risk appetite."

"A good way to express this tarde is a long EUR/JPY. But it also follows that we may see further gains in Asian and commodity currencies against the weaker USD."