Gold and CHF at Record Highs as Demand for Safe Heaven Intensifies

It was difficult for the global financial markets to maintain the optimism triggered byGreece’s bailout deal announced last week as traders are more concerned by the political disagreement among theU.S.lawmakers over raising the country’s debt ceiling and cut spending.

Democrats and Republicans are struggling to reach a compromise deal since they continue to be deadlocked only one week before August 2 deadline. This turned optimism into pessimism today, as fears from a possible default spread among the markets participants and demand for safe heaven increased.

Adding to today’s worried was Moody’s decision to cut Greece’s credit rating to Ca from Caa1, saying that investing in the debt-laden European nations continues to be very risky and implies “ substantial economic losses”. The euro fell today to the lowest of 1.4327 and is trading around 1.4370 as of this writing.

As uncertainties mount and lack of confidence remains a key factor in the global financial markets, selloffs spread across the board. This drove the pound to the lowest of 1.6259 althoughU.K.released today a better than expected BBA for house purchases report.

Gold continued today to record a new historical high at $16230.00 and as of this writing is hovering around the $1620.00 level. However the worries from a possible slowdown in the global recovery, pushed oil prices slightly lower today, and as of this writing is trading around the $99.30 level.

Economic data from theU.S.will be absent today. However investors will continue to focus on the States awaiting an agreement about the debt ceiling issues. The dollar however continue to strengthen trading around 74.15 as demand on lower yielding assets remains high.

The safe heaven yen also strengthened today trading around 78.15 as of this writing, while the Swiss frank reached a record high against the USD at 0.8038. The Asian and European stocks also fell today from fears the world’s largest economy may default.