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Forex - Dollar down vs. rivals as debt talks deadlock weighs

Published 07/26/2011, 04:38 AM
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Investing.com – The U.S. dollar was sharply lower against all of its major counterparts on Tuesday, as talks between U.S. President Barack Obama and congressional leaders on raising the U.S.’s USD14.3 trillion debt ceiling appeared to be making little progress.

During European morning trade, the greenback was down against the euro, with EUR/USD climbing 0.74% to hit 1.4492.

Late Monday, President Obama warned that the nation’s growing debt threatened to do “serious” damage to the economy and called on Congress to compromise, in order to avert a "reckless and irresponsible" national default ahead of the August 2 deadline.

The greenback was also down against the pound, with GBP/USD advancing 0.83% to hit 1.6406.

Earlier in the day, official data showed that the U.K. economy grew in line with expectations in the second quarter, expanding 0.2%.

Elsewhere, the greenback was trading close to a four-month trough against the yen and a record low against the Swiss franc, with USD/JPY shedding 0.30% to hit 78.04 and USD/CHF dropping 0.44% to hit 0.8024.

Japan’s Finance Minister Yoshihiko Noda repeated earlier that recent currency moves were one-sided and that he was closely watching market developments.

In addition, the greenback was weaker against its Canadian, Australian and New Zealand counterparts, with USD/CAD shedding 0.52% to hit 0.9422, AUD/USD rising 0.79% to hit 1.0931 and NZD/USD rallying 0.94% to hit 0.8722.

Earlier Tuesday, official data showed that New Zealand’s trade surplus narrowed in June as exports fell to a five-month low.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.75%.

Later in the day, the U.S. was to publish government data on new home sales, as well as data on consumer confidence and house price inflation.   

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