* Dollar's 200-day moving average remains key technical
* Markets "not positioned for worst-case scenario" of U.S.
* Euro underpinned by hopeful signs that Greece could emerge
By Lisa Twaronite
TOKYO, Oct 8 The dollar eased off a fresh
two-month low against the yen touched in early trade on Tuesday
and remained not far from an eight-month low against a basket of
major currencies, as a continuing U.S. fiscal standoff kept
investors on their toes.
A few hopeful signs emerged on Monday, with President Barack
Obama saying he would accept a short-term increase in the
nation's borrowing authority to avoid a default. An influential
Senator is also said to be floating a plan to cut federal
spending and reform the U.S. tax code as part of a broader deal.
The dollar fell to 96.55 yen, its lowest
since Aug. 12, before recovering to 96.92 yen, up about 0.2
percent on the day, and pushing back above its 200-day moving
average at 96.72 after breaching that technical support level.
"It's a bit frustrating, because people want to trade on
those technicals, but it's really being driven by external
factors and if that (U.S. situation) were to rectify itself,
we'd probably be right back where we were at 98.50, 99," said
Bart Wakabayashi, head of forex at State Street Global Markets
Obama's press secretary, Jay Carney, told reporters the
president would be willing to accept a short-term increase in
the debt ceiling in order to get past the potential crisis date
of Oct. 17. The government hits its $16.7 trillion borrowing
limit then, and in a worst-case scenario, it could default on
"There's really not a lot of panic going on with the U.S.
situation. I think everyone's expecting they'll figure it out,
do the right thing," Wakabayashi said, adding that "the market
is not positioned for a worst-case scenario."
China and Japan, the United States' biggest creditors, are
increasingly worried the U.S. government shutdown and standoff
over the debt ceiling could wreak havoc on their trillions of
dollars of investments in U.S. Treasury bonds.
Japanese Finance Minister Taro Aso said on Tuesday that he
wants the United States to resolve its debt ceiling standoff
quickly to preserve his country's foreign reserves and the
The impasse has distracted investors from what had
previously been their main preoccupation: the timing of the U.S.
Federal Reserve's reduction of its stimulus, which had buoyed
the greenback in recent months.
"No one wants to be caught short if there's a sudden
resolution of the fiscal impasse, so every time the dollar takes
two steps down, it tends to take one step back up," said a
researcher at a foreign exchange market research firm in Tokyo.
The dollar index inched up 0.1 percent to 80.024
creeping away from its eight-month low of 79.627 hit on Thursday
The euro drifted lower, down about 0.2 percent at $1.3561
, pulling away from an eight-month high of $1.3645 touched
The European currency was underpinned by news from Greece
that the struggling nation will emerge from six years of
recession next year, according to a draft budget forecast on