Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, explains why the FX market seems to ignore the subject of the “debt ceiling”

Risk of default has not moved USD to such an extent that identification of the effect would be clear

“The market cannot reach consensus about the effect such a one-off event will have. If no market participant can project how all the others would evaluate a US default nobody can deduct positions from their own view as to whether it will happen or not. And that means we are in a situation where the market seems to ignore this risk.”

“Only that that does not mean that nothing would happen to the USD exchange rates if a default really were to arise!”