Greenback Under Pressure as the U.S. Debt Deadlock Continues

Despite the uncertainties that surround the global economic recovery, the high yielding assets managed to incline today as the dollar selloff intensified since the Democrats and Republicans failed to reach an agreement to raise the debt ceiling and cut spending.

As August 2 deadline is near, and the U.S.lawmakers remained deadlocked, the USD came under huge selling pressures, which sent the euro, GBP and other high yielding assets to the upside. This also drove the Swiss frank to a new record high against the dollar at 0.7995 and the yen to a 4 months high against the dollar at 77.87.

The European debt situation is not solved yet, however the focus turned to the U.S., since investors question their ability to handle their debt problems, especially after Europe presented the Greek package, which managed to calm some spirits down for a while and bring the euro even more gains.

Although it is hard to believe that the U.S.will put itself in a default scenario, caution will persist until the dark clouds will be gone. However some optimism was seen this morning in Asia on improved earnings reports, which brought gains to the Asian stocks.

The euro rose today to the highest of 1.4522 and as of this writing is trading around the 1.4470 level, despite the numerous questions about the long term dilemma Europe is facing while the German Gfk consumer confidence disappointed today falling to 5.4 in August from 5.7 previous.

The pound rose today to the highest of 1.6412 and as of this writing is trading around the 1.6388 level, although the Advanced GDP report showed today that the economy grew only by 0.2% in Q2 from the previous 0.5%, which could weigh down on any rate hike bets.

Gold is trading today around the $1611.65 level yet close to yesterday’s record high. Crude oil remains consolidated around the $99.50 level. The U.S.will release today a bunch of data including new home sales, the consumer confidence reading and the S&P/CS Composite-20 HPI.