It was a wild ride today in Asia as the Dollar continued to be on the receiving end of a beating due to the continued stalemate in debt ceiling talks in the US Government. While the markets were calm in anticipation of US President Obama’s televised press conference at 1:00GMT, the dollar landslide began as it became apparent during the speech that the disagreeing parties were still seemingly worlds apart at the bargaining table. The president’s speech and republican rebuttal at times sounded more like campaign rhetoric than two parties with the same goal in sight, prompting markets to dump dollars as the talking commenced.
As the bearish views on the greenback were validated, traders sought the safety of the Swiss Franc once again, pushing the unit to all time highs near 0.8000 against the dollar, which sank across the board. The EUR/USD skipped through stops near 1.4400 and 1.4420 to eventually touch levels over the 1.4500 big figure late in the day. That forged a path for the majors, which quickly followed, pushing the GBP/USD from 1.6265 to 1.6365, and the AUD/USD through 1.0920 on a big figure gallop higher. The NZD/USD had a record breaking day on the dollar weakness, printing all time record highs just near 0.8705.
As it became clear that the opposing factions in the US Government were not on the same page with debt ceiling talks, the yen strengthened with safe haven flows, dropping USD/JPY under 77.90. Within a few minutes of those lows, USD/JPY exploded through 78.50, prompting many to assume BOJ intervention in the thinned markets. As the yen did a straight line decline across the board many traders jumped on board, accelerating the moves in very skittish markets. While there was no comments out of the Bank of Japan as far as intervention was concerned, rumors surfaced that a hedge fund bought a large block of USD/JPY. But as quickly as the USD/JPY touched highs, Japanese exporters smacked it lower and eventually sold the pair back down to the 78.00 big figure, while cross yen pairs followed.
Looking ahead to the London session, the looming August 2nd default deadline for the US will remain the focus of global markets.
