Forex Asia Review – Dollar remains weak against majors after Obama speech signaled no progress in debt talks

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The Euro was supported by a weaker Dollar following a speech from President Obama addressing the nation from the White House and from U.S. House Speaker John Boehner that suggested a compromise budget deal is still not close. Meanwhile, the August 2^nd deadline to raise the debt ceiling is closer. This resulted in putting the Dollar under pressure, consequently shoring up the Euro to a high of 1.4484 from the low of 1.4356.

Cable traded alongside the EURUSD taking direction from the Euro and events in the U.S. The deadlock in talks between Democrats and Republicans on reaching an agreement on raising the debt ceiling made investors cautious of investing in the Dollar, especially after Obama’s speech to the nation suggesting no progress in debt ceiling talks. GBPUSD opened Asia at 1.6273 surging to a high of 1.6342.

The Swiss Franc was the biggest gainer as it strengthened to another record high against the Dollar, owing to its safe haven status. The Swiss currency is traditionally known to be a safe haven investment in times of crisis. USDCHF fell from a high of 0.8069 down to 0.8004 following comments from President Obama that growing debt could cost the U.S. a lot of jobs and do serious damage to the economy.

USDJPY fell as the Dollar was weakened further against the Japanese Yen, falling to a four month low of 77.88. Sharp gains in the Yen are limited on speculation Japan will intervene in markets to stop its appreciation. Today Bank of Japan governor Shirakawa reiterated that he is closely watching the markets and will intervene if necessary, making traders jittery. At one point in the session, the Dollar surged nearly a full Yen in a matter of minutes, to 78.68, a spike that market players attributed to Dollar buying by a hedge fund and some Japanese banks. Traders said there was no talk of Yen-selling intervention by Japanese authorities, and the Dollar quickly retreated from its intraday high to close at 78.05.

The Australian dollar rose to a near-three month high as the U.S. debt impasse and Europe’s persistent debt troubles sent investors to currencies backed by stronger economies. The Australian dollar hit a high of 1.0917, its best level since May 3, from a low of 1.0820.

Gold held steady below its record high and remained in a range as investors watched closely for signs of progress on the U.S. impasse over debt ceiling talks, while euro zone debt woes continued to support the precious metal. Spot gold traded sideways between 1610.98 and 1616.31.