The European Bank stress test results on Friday did little to lift the Euro as investors attention shifted quickly back to concerns over the European debt crisis and to the next emergency meeting of EU leaders scheduled for Thursday. Concerns are also growing over the US debt after little progress was reached over the weekend on raising the country’s borrowing ceiling ahead of a deadline of August 2. EURUSD lost 85 pips from an early session high of 1.4132 down to a low of 1.4050.
GBPUSD followed on the back foot of the Euro, with lack of UK-specific fundamental, Sterling took direction from events elsewhere. Cable opened the Asian session at 1.6105, reached a high of 1.6132 and fell to as low as 1.6066 as general risk appetite was dampened by concerns over both European and US debt.
USDJPY traded in a range during the Asian session since the Japanese bank holiday resulted in light volume. Dollar tended to be weaker though, especially after Friday’s US economic data on consumer sentiment showed it consumer confidence hit a near two and a half year low in early July and manufacturing output stalled in June, adding to worries about economic growth in the U.S. USDJPY opened the session at 79.05 and closed slightly down at 79.01.
The Australian Dollar fell for a third straight day against the Dollar since Thursday’s high of 1.0756 down some 215 pips to a session low of 1.0582 today. Investors are shifting away from risk currencies after the U.S. failed to reach an agreement over the weekend to raise the government’s debt ceiling. Also a second ratings agency threatened to cut the U.S. triple-A credit rating if the debt limit is not raised by August 2nd.
Spot gold hit a new record high in the Asian session, reflecting persistent worries about the Eurozone debt crisis and a growing threat of a U.S. government default. Spot gold climbed to an all-time high of $1,597.98. Gold is traditionally known to be a safe haven asset and is in demand now as investors fear that the stalemate in negotiations over a U.S. deficit plan could lead to a default, which might wreak havoc in global markets and send the world’s top economy back to recession.
Note: Daylight Saving Time is in effect for GMT