USD Falls as Lawmakers Reach Debt Agreement | Learn Forex | GoLearnForex.com

USD Falls as Lawmakers Reach Debt Agreement

Written by article default Monday, 01 August 2011 16:18

USD Dollar (USD) – In forex trading, the Dollar fell against most of the major currencies amid increased risk appetite amongst investors and on speculation that raising the U.S. debt limit will be approved later on today. US President Barack Obama said earlier today that leaders of both parties in the U.S. House and Senate had approved an agreement, which must now be sold to Congress. This agreement will raise the nation’s debt ceiling by $2.1 trillion and cut the federal deficit by as much as $2.5 trillion over a decade. The President’s announcement forestalled the Aug. 2 deadline to default and wore down demand for haven assets. In addition, the Advance GDP expanded at a 1.3 percent annual rate in the second quarter, after a 0.4 percent pace in the prior period, the worst six months since the recovery began in June 2009. The Stock Markets closed negative as the Dow Jones fell by 0.79% and the NASDAQ lost 0.36%. The main reasons are a combination of disappointing US GDP figures and the debt deal negotiations. Crude oil fell by 0.20%, closing at $97.00 a barrel, on concern that a failure to reach a deal on raising the U.S. debt limit may cause the nation to default, and threatening the economy of the world’s biggest crude oil consumer. Gold (XAU) traded unchanged, closing at $1,616 an ounce after reaching an earlier record of $1,632.70 an ounce. Today, the ISM Manufacturing PMI is expected to decline to 55.0 vs. 55.3 previously.

Euro (EUR) – The Euro strengthened against the U.S. Dollar after the release of weak economic data in the US and proceeded to recover from weekly lows at 1.4230. In addition, there are reports which suggest that chances are slim that a US Senate vote on the latest debt agreement will take place before Monday. Trading above the support level of 1.4300 will keep the momentum positive for the pair, but if the pair breaks above this support level, it may reach the 1.4100 level again. Overall, the EUR/USD traded with a low of 1.4228 and with a high of 1.4412. Today, the Unemployment Rate is expected to remain at 9.9% as it was previously.

EUR/USD – Last: 1.4380

British Pound (GBP) – The Pound strengthened against the greenback after the pair didn't succeed to break its support of 1.6280 and long awaited positive economic data regarding the UK economy was released. The trend for the pair remains bullish if the pair maintains its support level of 1.6320, but if the pair breaks that support, it may reach 1.6150. Overall, the GBP/USD traded with a low of 1.6260 and with a high of 1.6472. Today, the Manufacturing PMI is expected to decline to 51.1 vs. 51.3 previously.

GBP/USD - Last: 1.6440

Japanese Yen (JPY) – The dollar strengthened against the Yen on speculation of a possible agreement in Washington DC; encouraging USD buying as well as covering risk aversion trades. If the pair succeeds to break its resistance level of 78.00, it may bring the pair to the 78.80 resistance level once again. Tomorrow, Average Cash Earnings are expected to grow by 0.40% vs. 1.00% previously.

USD/JPY-Last: 77.70

Canadian dollar (CAD) – The Canadian Dollar fell slightly against its U.S. counterpart on concern that the U.S. economy, the main destination for Canadian exports, is losing momentum amid political delays to raising the U.S. debt ceiling. The trend for the pair will be bearish if the pair breaks the support level of 0.9500. Today, most Canadian banks will be closed in observance of Civic Day.

USD/CAD - Last: 0.9520