* Signs of progress on U.S. fiscal talks, but deal elusive
* Yen edges higher, dollar/yen off Friday's near 2-wk high
By Anooja Debnath
LONDON, Oct 14 The dollar slipped on Monday and
the yen gained on safe-haven demand over concerns the United
States might default on its debt as lawmakers struggled to reach
a deal on raising its borrowing facility ahead of this week's
The dollar slipped 0.3 percent to 98.26 yen, having
touched a low of about 98.05 yen earlier in the day. The dollar
retreated from a near two-week high of 98.60 yen set on Friday.
The yen's liquidity makes it a relatively safe option during
times of uncertainty.
Negotiations in the U.S. Senate to bring the fiscal crisis
to an end showed signs of progress on Sunday but failed to give
any concrete indication that a default would be avoided.
Senate Majority Leader Harry Reid and Republican leader
Mitch McConnell held talks that Reid called "substantive".
Reid's remarks gave some hope that Congress might soon pass
legislation to fund the government and raise its borrowing
Failure to break the stalemate before Thursday, the deadline
to raise the debt ceiling, would leave the world's biggest
economy unable to pay its bills in the coming weeks.
"Over the weekend it was disappointing that an agreement
still hasn't been reached. We think the closer we get to the
debt ceiling deadline without an agreement, dollar/yen will come
under the intensive selling pressure," said Lee Hardman,
currency economist at BTMU.
"The yen alongside the Swiss franc, safe haven currencies,
should benefit if broader investor risk aversion picks up."
Traders said bids for the U.S. dollar at levels near 98.00
yen helped to limit the yen's rise.
The dollar was down 0.1 percent against the Swiss franc
at 0.9114 francs while the euro rose 0.1 percent
Analysts said market players were also probably wary of
betting too heavily in one direction, given the possibility of a
last-minute deal which could see the dollar rally.
Market holidays in Japan and partial market closure in the
United States on Monday added to the subdued mood.
"I think people are kind of in limbo... A bit fearful but
hopeful as well that something can be done before the deadline,"
said Sim Moh Siong, FX strategist for Bank of Singapore.
Low risk sentiment and worries about China's economic
strength weighed on growth-linked currencies like the Australian
Data released on Saturday showed export growth in China,
Australia's top export market, fizzled in September to post a
The Aussie was last down 0.1 percent at $0.9455.
The currency's losses, however, were somewhat limited by
news that China's iron ore imports surged to a record high in
September, a move that augurs well for Australia's trade figures
due out next month.