Forex - USD/JPY trims losses on new hopes for end to impasse

Investing.com ג€' The dollar traded lower against the yen on Monday though it trimmed losses after new hopes arose that U.S. policymakers may be closer to ending a fiscal deadlock that has closed the government and is threatening to throw the country into default.

The U.S. is due to hit its debt ceiling on Thursday, after which Washington won't be able to guarantee all of its obligations.

In U.S. trading on Monday, USD/JPY was trading at 98.43, down 0.13%, up from a session low of 98.10 and off a high of 98.47.

The pair was likely to find support at 96.57, last Monday's low, and resistance at 98.60, Friday's high.

Negotiations between the White House and congressional Republicans and Democrats remained in a deadlock on Monday, with both sides unable to agree on a short-term debt ceiling increase.

A government shutdown, also the product of congressional ability to agree on a spending package, was set to enter its third week this week.

However, on Monday afternoon, Senate Majority Leader Harry Reid, a Nevada Democrat, said lawmakers were getting closer to a deal that could steer the country away from default and reopen the federal government.

While no details emerged, hopes for a last-minute accord that will avoid crisis lifted the dollar somewhat.

Elsewhere, global finance ministers and central bank chiefs gathered in Washington for the annual meeting of the International Monetary Fund and World Bank, calling for urgent action to end the stalemate and avoid default, which could bruise global economic recovery.

IMF Managing Director Christine Lagarde said on Sunday that failure to raise the debt ceiling and fund the government has global policymakers worried.

ג€'If there is that degree of disruption, that lack of certainty, that lack of trust in the U.S. signature, it would mean massive disruption the world over, and we would be at risk of tipping, yet again, into recession,ג€' Lagarde said in an interview with NBCג€™S ג€'Meet the Pressג€' program.

The yen was down against the pound and down against the euro, with GBP/JPY up 0.07% and trading at 157.27 and EUR/JPY trading up 0.03% at 133.48.

On Tuesday, the U.S. is scheduled to release a report on manufacturing activity in the Empire state.

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