USD Continues To Be Hammered Ahead Of Aug 2 Deadline

The Dollar continues to weaken against major currencies as President Obama and the Congress still haven’t come to agreement on debt limit and prevent a default and credit-rating downgrade.

The Obama administration threatened a presidential veto of Boehner’s two-step plan to raise the $14.3 trillion debt ceiling and cut $3 trillion in expenditure. A vote on the measure had been scheduled for today and was postponed until tomorrow, still ahead of an Aug. 2 deadline when Treasury Secretary Geithner has said the U.S. will run out of options to prevent a default. A cut of the U.S.’s top AAA credit rating would likely raise the nation’s borrowing costs by increasing Treasury yields by 60 to 70 basis points over the medium term while S&P reiterated on July 21 that the chance of a downgrade is 50% in the next three months and said it may cut the nation as soon as August.

EURUSD jumped to 1.4535 on persistent Dollar weakness, AUDUSD moved up to 1.1080, NZDUSD moved up to 0.8764 after inflation report from Australia showed a jump in consumer prices in Q2, more than forecast by 0.9% MoM and 3.6% YoY which added more downwards pressure on the Dollar, GBPUSD reached more than a two-month high of 1.6439 after GDP grew at 0.2%, Dollar weakness despite factory orders expected to decline, USDCHF traded at 0.7996 lows, USDJPY at 77.61 lows and Gold moved up to $1625 highs.

US Durable Goods orders, Oil inventory data, Fed’s beige book are the important economic releases today but markets are still worried about developments in the US as the deadline of Aug 2 nears and the US government hasn’t even reached agreement on debt limits.

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