The Euro climbed to a three week high against the dollar in the New York session as the deadlock in negotiations to raise the U.S. debt ceiling dragged on, increasing the prospect of default and causing a Dollar sell-off as investors turn to alternative currencies. EURUSD marginally broke past the previous two session highs, to peak at 1.4524 from a low of 1.4455.
Sterling hit a new six-week high of 1.6427 against the Dollar in the U.S. session breaking the previous session high. The British Pound has been boosted today following GDP data from the U.K. which indicated the economy grew by 0.2 percent as expected in the second quarter. Some investors expected the economy contracted and were bracing for lower numbers, but were relieved with the data, consequently buying up the Pound which was seen more favourable versus the Dollar at the moment.
The Swiss Franc traded close to the record level reached against the Dollar in the European session. The Swiss currency is traditionally perceived as a safe haven currency in times of crisis. USDCHF reached the all-time low by breaking below a key option barrier to touch 0.7997 and traded sideways slightly above that level throughout the U.S. session, as low as 0.8003.
USDJPY reached yet a new four-month low touching 77.82 late in the U.S. session. The previous low was on March 17 after the devastating earthquake and tsunami in Japan and just before the G7 intervened to halt the Yen from strengthening further. IN fact, these past few days there has been speculation that the Bank of Japan might intervene to correct the Japanese currency as its strength is detrimental for exports.
The Canadian dollar strengthened against its U.S. counterpart today reaching a three-and a half year high against the greenback, early in New York trading as debt fears in the United States continued to knock down the U.S. Dollar. USDCAD touched a low of 0.9405, the lowest since November 2007, as a speech by U.S. President Barack Obama on Monday gave no sign of a swift breakthrough in deadlocked talks to raise the U.S. debt ceiling. Canadian Finance Minister, Jim Flaherty said today that the Canadian currency represents stability for many investors and is attractive as a safe haven investment.
Gold has been trading sideways since hitting the record high on Monday, hovering just below that resistance level and above $1,608.40 support level. In the U.S. session, prices rose within the range, from a low of $1,607.18 to a high of $1,618.77. The precious metal is likely to remain in demand as a safe haven investment until the U.S. Congress agrees on a plan to cut the U.S. deficit and raise the debt ceiling. Gold prices and the Dollar have an inverse relationship.