Daily currency report

The Swiss franc reached a new record high against the US dollar as supported by safe-haven demand has now risen by around 30 per cent against the US currency over the past 12 months and remains near record highs against the euro. US President Barack Obama warned that failure to compromise on lifting the nation’s €14.3 trillion debt ceiling could spark another economic crisis. As a result, investors flocked towards safer assets including the yen which breached fresh four-month highs against the US dollar. The euro also managed notable gains against the greenback despite Moody’s adding another downgrade to Greek debt, citing the recent aid packing as simply “buying time”. Sterling has come under more pressure over the past 24 hours with markets growing cautious ahead of the morning’s Q2 UK GDP figures.

Sterling

Sterling fell towards recent all-time lows against the Swiss franc ahead of key Q2 GDP release. The UK economy barely limped back into expansion territory in the early part of this year and was far from a strong rebound following on from the surprise contraction seen in late 2010. Consequently, sterling also lost ground on both the euro and US dollar.

US dollar

US President Barack Obama warned that failure to compromise on lifting the nation’s €14.3 trillion debt ceiling could spark another economic crisis. Mr Obama’s comments made clear that political wrangling between the Republicans and Democrats would have a detrimental impact not only on the attractiveness of US debt to outside investors, but also the world economy. Subsequently, the US dollar tumbled to fresh record lows against the Swiss franc as well as four-months lows on the Japanese yen as investors scrambled for safety.

Euro

The euro shot to three-week highs against the US dollar as the US currency comes under heavy pressure from weak fundamentals and both technical and speculative flows. The single currency’s upside potential is, however, limited to a certain degree with markets still unsure over contagion threats within the eurozone.

Japanese yen

The yen continues to defy warnings, seen by many as “verbal intervention” against the yen’s strength, breaching fresh four-month highs against the US dollar.

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