US politicians struck deal; no longer spectre of default

America finally will not default on its obligations as US politicians agreed on a framework which somehow fits the bill. Obama confirmed they have a compromise in the works. Republican leader Boehner and Democratic Reid have agreed.

After a tough Sunday of conversations, the White House briefing room summoned the press where President Barack Obama made a much-awaited statement as Asian market were opening. Talk prior to the speech was that all the parties were backing the deal.

Once on stage, Obama said leaders from both parties struck a debt deal that will cut 1 trillion dollars in spending over the next 10 years, lowest level since Dwight D. Eisenhower, while also raising the debt ceiling.

Obama warned struggles over U.S. fiscal policy isn’t over, also stressing the deal had to be balanced, so in November politicians will be back to review it, in order to further reduce the deficit.

“Everything will be on the table,” Mr. Obama said. “I will continue to make the case..that a balanced approach is necessary to do the job,” the President added. “We are not done yet,” Mr. Obama said. “I urge members to do the right thing and support this deal with your vote.”

U.S. Senate leader Harry Reid said Congress reaches 'historic' debt deal. The President said the debt talks were messy and far too long but finally leaders came to a compromise.

The question now is whether or not enough House Republicans will agree to vote for the package? As reported by the Washington Journal: “In the short term, Mr. Obama and congressional leaders need to deliver votes to pass the proposal worked out in closed-door talks among White House officials and congressional leaders.”

The WSJ adds: "Long term, Mr. Obama made it clear in his remarks he’s not done fighting for his vision of how the U.S. should narrow its budget gap, which is a combination of raising taxes and cutting spending. Republicans rejected tax increases throughout weeks of wrangling leading up to today. Democrats are equally adamant that Medicare and Social Security not be curtailed."

GBP/USD hit a session high at 1.6465, about 55 pips higher than last Friday's close. EUR/USD just kissed 1.4390, 20 pips higher from starting level at the Asian interbank trading. AUD/USD made a new session high at 1.1050, while Gold is retreating towards $1,608.00 now.