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Fitch warns U.S. risks coveted AAA credit rating
(Reuters) - The United States probably wouldn't be able to maintain its prized AAA sovereign ratings status if it suffered even a "technical" default on its debt, Fitch Ratings said on Wednesday.
Members of the Republican party have been flirting with the notion that a brief U.S. default might be an acceptable price to pay if it forces the White House to deal with runaway spending in their negotiations over raising the national debt ceiling.
In a statement, Fitch warned it would downgrade the U.S. sovereign ratings to "restricted default" in August if the government fails to honor payments on Treasury securities due on August 15.
"Even a so-called 'technical default' would suggest a crisis of 'governance' from a sovereign credit and rating perspective and though such an event (such as a ...
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Dukascopy Afternoon Forex Overview : 08/06/2011
Previous session overview
Investor sentiment towards risk in currency markets nosedived in European trading hours Wednesday following downbeat overnight comments from U.S. Federal Reserve Chairman Ben Bernanke, while the pound got hit on fresh credit rating concerns.
The dollar was mostly higher, while risk-sensitive currencies such as Australia, Canada and New Zealand weakened as Bernanke's gloomy assessment of the economy dented investor appetite to put on risky bets, with European equity markets falling too.
Sterling plunged to a one-month low against the euro and fell around 0.3% against the dollar following a report that Moody's Investors Service Inc. could cut the U.K.'s Aaa rating if growth remains weak and the coalition government fails to meet its fiscal consolidation targets. ...
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USDJPY broke below 80.00 again during the Asia session
USD
Risk appetite was generally subdued during the Asia session, after an article speculated on the likelihood of a hard landing for the Chinese economy. USDJPY broke below 80.00 again to hit a one-month low. EURUSD traded 1.4644-1.4697, USDJPY 79.75-80.28. Fed Chairman Bernanke struck a rather negative tone, clearly voicing his displeasure with the labour market situation, but we doubt they pointed to fresh stimulus. He noted that ‘until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established’. The end of QE2 in June was once again confirmed but he stressed accommodation was needed until employment returned to acceptable levels. We also note that strong deflation risk is one of the bars for renewed QE, and his comments suggested that ...
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Gold steady, market seeks clues on U.S. policy move
(Reuters) - Gold was steady on Wednesday as investors waited for hints on the U.S. central bank's next policy move after its chairman acknowledged the economy had slowed, while a slight rebound in the dollar weighed on prices.
Gold breached $1,550 for the second straight session on Tuesday, but failed to close above that key level as the lack of clues on further stimulus plan in Federal Reserve Chairman Ben Bernanke's remarks kept investors on edge.
"Gold lacks momentum for a rally but does not have much room on the downside," said Li Ning, an analyst at Shanghai CIFCO Futures. "We need some earth-shattering news to stimulate the market."
If the Fed flagged further quantitative easing, it would drive investors, wary of future inflation, to store their value in bullion, traders say.
But ...
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Dollar slips on broad yen buying, Bernanke remarks weigh
(Reuters) - The dollar slipped to a one-month low under 80 yen on Wednesday as the yen was bought back broadly amid heightened risk-aversion reflecting general falls in Asian share prices.
The U.S. currency was also weighed down by comments from Federal Reserve Chairman Ben Bernanke that bolstered expectations U.S. interest rates would stay low for now.
Bernanke gave a somber assessment of the U.S. economy, acknowledging that growth has slowed, but offered no hint of providing more stimulus to accelerate growth.
The yen firmed broadly in technical-led activity, pushing down the dollar to 79.75 yen -- the lowest since May 5 -- after a series of stop-loss orders were triggered as the U.S. currency failed to sustain technical support slightly below 80 yen, Tokyo dealers said.
"The dollar ...
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Oil lower ahead of OPEC meeting, dollar eyed
(Reuters) - Brent oil fell on Wednesday, hovering around $116 a barrel, ahead of an OPEC meeting where members are expected to agree to raise global supplies to rein in high prices that have weighed on growth and stoked inflation in the United States, Europe and Asia.
Dollar weakness limited the fall after U.S. Federal Reserve Chairman Ben Bernanke said growth in the world's largest economy had slowed.
Brent crude dropped 70 cents to $116.08 a barrel by 0455 GMT, erasing some of the gains from the previous session. U.S. crude eased 45 cents to $98.64 a barrel.
Regardless of OPEC's decision, top oil exporter Saudi Arabia plans to pump another 500,000 barrels a day (bpd) this month to reach at least 9.5 million bpd, its highest output for three years, a senior Gulf industry official ...
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IMF: U.S. slowdown likely temporary
(Reuters) - The Federal Reserve does not need to consider additional monetary policy stimulus as the world's largest economy is likely to pick up in coming quarters due to growth in exports and disposable incomes, IMF acting chief John Lipsky said on Wednesday.
A slowdown in growth in the United States and other major economies is likely to be temporary, caused by a spike in energy prices, the acting managing director of the International Monetary Fund told Reuters in an interview.
There is a risk of high unemployment as economic recovery will be slow, and it is appropriate for advanced economies to maintain accommodative monetary policies, Lipsky said.
"Our expectation is current U.S. monetary policy is consistent with a return to moderate growth," he said, when asked if the Fed needed ...
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Fed's Dudley: U.S. recovery "distinctly subpar"
(Reuters) - The U.S. economic recovery remains unsatisfactory in spite of aggressive monetary and fiscal stimulus and recent commodity price rises are likely to be temporary, a top Federal Reserve policymaker said on Tuesday.
"The recovery remains distinctly subpar," New York Federal Reserve Bank President William Dudley told a Foreign Policy Association dinner.
The "large amount of slack" in the U.S. economy and subdued wages are counterbalancing commodity price gains, said Dudley, who is seen as one of the more dovish members of the Fed's policy-setting committee.
"There are good reasons to believe that that commodity prices will not continue to increase at the explosive rate of recent months," he said.
One reason is that demand for commodities will fall as households and businesses ...
Title:
Dukascopy Morning Forex Overview : 08/06/2011
Previous session overview
The dollar sank to a fresh one-month low against the yen in Asia Wednesday, with concerns about the U.S. economy and the lack of resilience in global stock markets prompting traders to sell the dollar and the euro for the yen to reduce risk.
The dollar fell as low as JPY79.75 in Tokyo morning trade, the lowest since May 5. U.S. funds apparently gave up their long positions as the dollar's upside test ended in failure, triggering stop-loss sales, traders said.
At 0510 GMT, the dollar was at JPY80.04 from JPY80.10 in late New York Tuesday.
During Asian trade, the euro ran into profit-taking against the dollar. It was at USD1.4670 from USD1.4690 late New York trade Tuesday, and JPY117.48 from JPY117.65. The U.K. pound was at USD1.6420 from USD1.6449.
The ICE ...
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