After a brief meeting with House Speaker John Boehner on Monday, US President Barack Obama submitted the Democratic Party’s latest list of demands.
Party leaders are now willing to allow Bush-era tax cuts to expire on those earners making $400,000 or more, rather than $250,000 or more.
Changes in Social Security are also being considered, with leaders willing to allow a change in the way that the program calculates the cost of living standard, while lowering the amount of sought after tax revenue by $200 billion. Previously, the President sought $1.4 trillion in total tax revenue.
However, the proposal didn’t include an increase in the age eligibility of the Medicare program and further payroll tax cuts. An inclusion of the Medicare eligibility will likely have been a tough sell to Obama’s own Democratic Party, with some members still unsure of the income tax rate concession.
Roadblocks Still Ahead
Still, there is a likely road bump ahead in the discussions for an extension on the $16.4 trillion US debt ceiling. Republican leaders continue to push for only a 1-year extension, while the new proposal by the administration looks for at least two years. This is unlikely to happen as Republican leaders remain staunchly committed to the ceiling and reining in of government borrowing.
Nonetheless, with the White House making concessions, it seems that both sides may come to a potential agreement before the end of the year. This is bullish for the US dollar, especially against the greenback in the short term.
The notion is bolstering the USDJPY further. With support at 83.82 reinforcing the upward bias, the USDJPY pair could extend higher towards 84.50 in the short term on a break of the 84.34 resistance barrier. Any correction would like be met with support, initially, at 83.69 and then at 83.19.
Source: FXTrek Intellicharts