While analysts and US officials say the government will still have roughly $30 billion in cash to pay many obligations for at least a few days after today, the financial sector would begin to seize up if the deal were not finalised in both chambers.

The planned votes signal a temporary ceasefire between Republicans and the White House in their latest no-holds-barred struggle over spending and deficits that has at times paralysed both decision-making and basic functions of government.

The deal is seen as a victory for Obama

The political dysfunction has worried US allies and creditors such as China, the biggest holder of US debt, and raised questions about the impact on America’s prestige.

The US Treasury has said the political impasse risks hurting the United States’ international reputation as a safe haven and stable financial centre.

Yesterday Senate Majority Leader Harry Reid and Republican leader Mitch McConnell announced the fiscal agreement on the Senate floor, where it was expected to win swift approval after a main Republican critic of the deal, Senator Ted Cruz of Texas, said he would not use procedural moves to delay a vote.

The deal is seen as a victory for Obama, who held firm and refused to negotiate on changes to Obamacare, and a loss for House of Representatives Speaker John Boehner, who again failed to marshal his unruly Republican caucus, particularly lawmakers aligned to the conservative, small government Tea Party movement. The fight over Obamacare rapidly grew into a brawl over the debt ceiling, threatening a default that global financial organisations warned could throw the US back into recession and cause a global economic disaster.

“Even though the market is moving up, this is a real historic event that is happening here so there is pause and concern,” said Frank Davis, director of sales and trading at LEK Securities in New York.

“You are seeing a lack of activity because it’s hard to invest in a market where you don’t know what’s around the corner.”

The Dow Jones industrial average .DJI and the Standard & Poor’s 500 Index .SPX were up more up than one per cent. Trading volumes, however, were low, at just 2.4 billion shares.

Fitch Ratings said on Tuesday it could cut the US sovereign credit rating from AAA, citing the political brinkmanship over raising the debt ceiling.

The deal announced yesterday basically gives Obama what he has demanded for months: A straight-forward debt limit hike and government funding Bill.

A resolution to the crisis cannot come soon enough for many companies. American consumers have put away their wallets, at least temporarily, instead of spending on big-ticket items like cars and recreational vehicles.

“We’re sort of ‘crises-ed’ out,” said Tammy Darvish, vice president of DARCARS Automotive Group, a family-run company that owns 21 auto dealerships in the greater Washington area. Many political pundits and Democratic Party politicians have predicted for weeks that a faction of Republicans in the House would drag out the crisis before making a last-minute deal.

Numerous polls show Republicans have taken a hit in public opinion. A Rasmussen poll yesterday showed that if congressional elections were held today, 78 per cent of Americans would like to see the entire Congress thrown out and replaced.

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