US agrees debt ceiling rise of $2.1trn

President Barack Obama has announced a deal to end the US debt crisis, which will raise the nation's debt ceiling by at least $2.1trn and cut the federal deficit by as much as $2.5trn over a decade.

The US President last night said leaders of both parties in the US House and Senate had approved the agreement, which must now be sold to Congress by 2 August, according to Bloomberg.

"This compromise does make a serious down payment on the deficit-reduction we need. Most importantly it will allow us to avoid default," Obama said.

A raise in the debt ceiling by at least $2.1trn would serve the nation's needs into 2013.

The deal includes a cut in spending over a decade of $917bn.

Initially the debt limit would be raised by $900bn, and then a special committee would be tasked with finding another $1.5trn in deficit savings by the end of the year.

Congress is expected to agree the deal.

The dollar and oil prices climbed, and gold fell last night on the news. US currency rose 1.3% to 77.79 yen and 0.2% to $1.4376 per euro before 10am in Tokyo.

Gold slid 1.1% to $1,610.7 an ounce. Crude oil for September delivery rose 1.6% to $97.19 a barrel on the New York Mercantile Exchange.