U.S. House to Waste Time on Debt Ceiling Vote While Americans Suffer Higher Rents

The U.S. House of Representatives is expected to vote on a piece of legislation that would raise the nation's debt ceiling on Tuesday. CNN reports that the vote is expected to fail. Meanwhile, the cost of leasing is increasing across the United States, as homeownership continues to decline. While the increasing cost of gasoline is seen as a major catalyst in inflation data, shelter presently represents roughly 40% of the consumer price index. The debt ceiling vote and the rising cost of leasing are intertwined--each may affect the value of the U.S. dollar. The U.S. dollar index is down Tuesday, after rallying back from hitting its all-time low at the beginning of May. If the U.S. government is unable to increase its debt ceiling, it might be forced to default, which may have disastrous economic consequences. In such a circumstance, the value of the dollar against other currencies may plummet, as a default on the U.S. government's debt may amount to a default on the dollar itself. Simultaneously, if the CPI begins to increase due to inflation in the cost of leasing, the Federal Reserve may be forced to tighten monetary policy, which could either strengthen or weaken the dollar. The dollar may strengthen if credit tightening reduces the money supply; weaken if credit tightening crushes the economy. Traders looking to play a weaker dollar might consider PowerShares DB US Dollar Bearish Index UDN. UDN attempts to return a value corresponding to the inverse strength of the dollar and may do well if the dollar depreciates against other currencies.