Republicans and Democrats are now entering the 11th hour in the political debate over the raising of the debt ceiling. Despite no signs of progress, the USD made a comeback overnight. USDJPY and USDCHF managed to recover the 78.00 and 0.8000 levels after plummeting lower and causing short traders to pray for central bank intervention. The RBNZ has left rates on hold this morning at 2.5% flagging no need for further rate rises soon and this has seen the AUDNZD pair rally strongly.
S&P downgraded Greece's credit rating to CC again citing a selective default by the nation under the latest aid plan. EUR fell from above 1.4530 to trade as low as 1.4339. Comments by the German Finance Minister that were resistant to giving the EFSF full authority to buy European bonds also placed further pressure on the EUR. The Australian dollar soared to as high as 1.1080 yesterday on the back of higher than expected CPI numbers. Comments from Treasurer Swan that there will be no intervention in the Australian dollar and an article by Terry McCrann saying, “The RBA really has choice. It must lift its official cash rate next Tuesday and it will.”, put a rocket under the AUD
Equity markets plummeted overnight as the continuing saga of the US debt ceiling saw investors flee the market as uncertainty prevailed. The S&P 500 fell over 2% to 1,305 as US 1 year CDS traded at a one year high implying a BBB credit rating. GE and Caterpillar fell as durable goods orders decreased unexpectedly. In Europe, stocks were also hit with the DAX lower by 1.32% to 7,253 and the FTSE was down 1.23% to 7,252.
Commodities eased overnight. Crude Oil fell over 2% to $96.50 on the back of rising inventories and growth concerns in the US. Gold soared to another record high last night before settling to trade at $1,613 this morning. Silver has settled to trade just above $40.00. Soft commodities were mixed while copper fell 0.75%. The CRB is down 2.02 to 346.73.
