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Barclays’ Robinson Says Euro, Yen ‘Most Attractive’ on U.S. Debt

Paul Robinson, the global head of foreign-exchange research at Barclays Capital, comments on effects on the dollar and major currencies as U.S. lawmakers debate cutting the deficit and raising the debt limit.

He spoke in an interview today on Bloomberg Television’s “First Up.”

On effects on the dollar from the U.S. debt ceiling issue:

“It’s amazing how little impact there is on important announcements on the debt issues.”

“The negative U.S. shock, to some extent, offsets the global-risk shock when it comes to the dollar overall.”

“It’s typically a safe-haven currency.”

On how the U.S. debt negotiations will play out:

“If the U.S. doesn’t get its fiscal house in order, then the global economy has problems.”

“I think it is just going to go to the wire.”

“What they’re both hoping is the other guy will blink. I think that’s a very dangerous game of chicken they’re playing.”

The best bets in currency markets:

“Now is not the time to get too risky, too adventurous when it comes to FX markets.”

“The two currencies that are most attractive at the moment are the euro, because the debt issues haven’t really been resolved in the long term but have in the shorter run, and the yen, the classic risk-off trade.”

On why Japanese authorities are less likely to try to weaken the yen now compared to the intervention in March:

“That was a very special case, the earthquake had just happened. Importantly, the yen was appreciating very quickly, not just against the dollar but against all currencies. That isn’t happening now. The yen is grinding higher. That’s a big difference.”

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