Daily currency report

After breaching a string of fresh record lows, the US dollar opens boosted by an announcement that a deal has been reached to lift the government’s current $14.3 trillion debt ceiling. In the short term, the news is dollar supportive although the deal still needs the necessary votes and is expected to be rolled out. For now though, markets have received a welcome boost with investors moving immediately back into riskier currencies such as the New Zealand dollar and UK pound. Sterling continues to benefit from US and eurozone uncertainties, reaching almost two-month peaks on the dollar although a string of weak UK data suggests that current conditions may not last. The euro fell to a new all-time low against the Swiss franc with ratings agencies bombarding markets with warnings against several member nations.

Sterling

Sterling shot to almost two-month highs against the US dollar while also breaking through key levels on the euro despite another string of disappointing figures on the UK economy. Government debt concerns from both the US and eurozone are allowing some short-term respite for the pound, conditions which may not last if recent data is anything to go by.

US dollar

The US dollar’s demise continued though it was a worrying reading on second quarter growth which acted as the catalyst, following which the currency fell again through record levels against the popular safe-haven Swiss franc. However, the dollar opens boosted by the announced deal on US debt by US President Barack Obama. The landmark deal will see the $14.3 trillion debt ceiling lifted immediately while introducing plans to trim the country’s debt by $1 trillion over the next 10 years.

Euro

The direction of the euro is a little uncertain heading into this week. On the one hand, the expected agreement in Washington should provide the euro with the usual demand associated with a risk-on environment. However, once analysts are done with US debt, for now anyway, focus may quickly shift back to unfinished business in terms of eurozone government debt.

Japanese yen

Nothing has really changed from a Japanese yen perspective. Global headwinds continue to support a flight towards safety and as such, the yen continues to post notable gains from safe haven demand and an unwinding of carry trades. The Japanese finance minister said that currency moves are being watched very closely but they have yet to see any actual action.

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