Traders gear up for riskier assets

Global markets are primed for a relief rally after US negotiators agreed to a tentative deal over the weekend to resolve a debt crisis that has battered risk sentiment in recent weeks.

The US dollar, which has benefited from angst around the statutory borrowing limit, will be in focus as another week of trading begins at 5 a.m. Monday in Sydney. Liquidity is set to be thin with US and UK markets closed Monday for national holidays, although futures contracts referencing US Treasuries and the S&P 500 Index will trade.

Investors had flocked to safety in recent weeks as the so-called X-date - the day on which the Treasury expected it wouldn't be able to meet all of its obligations - rapidly approached. House Speaker Kevin McCarthy said he will talk with President Joe Biden again on Sunday and line the bill up for a vote on Wednesday.


"Markets should breathe a sigh of relief, with the dollar likely to soften a tad as the debt ceiling imbroglio is finally resolved," said Chang Wei Liang, a strategist at DBS Group Holdings in Singapore. "The deal appears well-balanced between reducing spending while not jeopardizing growth, and is likely to be a small positive for US Treasuries."

Somewhat ironically, the prospect of a US default has been a boon for the dollar, with the US dollar advancing against all of its Group-of-10 peers this month.