Although demand on safe haven persisted today, the U.S. dollar continues to be weak, trading around 73.50 since this morning, as traders remain worried that U.S. lawmakers will fail to reach an agreement to raise the debt ceiling and cut spending, which could lead to downgrading the AAA credit rating for the U.S.
A possible default could also slow the global economic recovery, thereby caution and demand for safe haven persisted today. Gold climbed to a new record high today at $1625.46. The CHF also reached a record high at 0.7993. The New Zealand dollar also climbed to a new all-time record high at 0.8764.
The yen continues to trade near a 4 months high at 77.55, while the Australian dollar set a new 28-year high after the Australian CPI showed prices pressures rose at the fastest pace during Q2 since late 2008, boosting speculations that the RBA might raise the interest rates sooner than expected.
The euro is trading around the 1.4500 level since this morning, with a slight downside momentum, since investors are reluctant to enter the market amid the huge uncertainties surrounding the outlook of the global recovery with the U.S.deadlock and Europe’s sovereign debt crisis.
Although the euro had a remarkable performance since the euro area ministers reached to an agreement over Greece’s second bailout package last week, the long term problems are not gone yet, and investors still doubt Europe’s ability to manage its sovereign debt crisis till the end.
The pound is almost unchanged today, and as of this witting is trading around the 1.6410 level, with only the CBI total orders on schedule today, which could have a disappointing outcome. Europe lacks the important economic data today, so markets will continue to focus on the developments from across the Atlantic.
The U.S. will release today its durable goods orders for June and the crude oil inventories, as well as the Fed’s beige book later in the day. The month of August is around the corner, when markets are usually quiet because of summer holidays, yet this year’s developments may keep markets volatile.