Forex News | Currency News by Forexlive

That’s higher than expected and another sign of increasing inflationary activity in the Asian growth economies of China, Korea and Australia.

US GDP growth in Q2 came in at 1.3%, which was much lower than expected, and to add to the gloom, Q1 figures were revised sharply downward from 1.9% to 0.4%. I suspect that much of this anaemic growth can be attributed to fresh borrowing and this does not bode well for the near-term.

Underlying economic strength is much weaker than expected and now the Fed is ending its QE2 and the US government is about to go into some degree of austerity mode. The US economy will start to contract; underlying weakness added to reduced stimuli and spending does not add up to GDP growth. This in turn will be bad for FX risk trades and of course for the USD. Any USD bounce brought about by a debt-ceiling deal is likely to be temporary.

Non farm payroll figures due this Friday will give us a bit more insight into how the economy is performing.

–Senate Majority Leader Issues Brief Statement, Seeks Dem Approval
–Senate Majority Leader Reid Met House Minority Leader Pelosi
–Senate Vote Would Likely Be Monday on Accord

By John Shaw

WASHINGTON (MNI) – Senate Majority Leader Harry Reid’s office
issued a brief statement Sunday evening saying Reid is willing to accept
a debt limit agreement that was largely negotiated by President Obama
and Senate Minority Leader Mitch McConnell.

“Senator Reid has signed off on the debt ceiling agreement pending
caucus approval,” said the statement from Reid’s office.

Reid will meet Sunday evening with Senate Democrats to make sure
that they can accept the package.

Reid met earlier in the day for nearly two hours with House
Minority Leader Nancy Pelosi.

House Speaker John Boehner is expected to confer with House
Republicans via conference call Sunday evening to discuss the agreement.

While Reid’s office confirmed his support for the debt ceiling
agreement, they did not disclose the accord’s details.

McConnell sketched out the broad elements of the agreement in two
Sunday morning news shows.

He said the agreement would increase the debt ceiling until the end
of 2012, cut spending by $1 trillion now and then cut spending by about
$2 trillion later in the year based on the work of special congressional
panel.

This panel would seek its cuts from both entitlement reforms and
tax reforms, McConnell said.

If a debt ceiling agreement is reached, it would be placed on the
Reid bill which is still pending in the Senate and voted on by the upper
chamber, possibly on Monday. It would then be sent to the House for a
final vote.

Passing a significant bill through both chambers in a few days is
certain to be difficult, especially since it will require a very unusual
coalition of Democratic and Republican lawmakers to support it.

The U.S. has already reached its $14.29 trillion debt ceiling.
Treasury Secretary Timothy Geithner has said that Congress must pass
legislation increasing the debt ceiling by August 2, this coming
Tuesday.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$,M$$CR$]

Just to introduce a bit more uncertainty into the equation, Nancy Pelosi says that House Democrats will meet on Monday and there is a possibility that some or all might not be able to support the bill.

Choppy trading conditions in the FX market and it’s likely to stay this way for the next 24 hours.

–Senate Majority Leader Issues Brief Statement, Seeks Dem Approval
–Senate Majority Leader Reid Met House Minority Leader Pelosi
–Senate Vote Would Likely Be Monday on Accord

By John Shaw

WASHINGTON (MNI) – Senate Majority Leader Harry Reid’s office
issued a brief statement Sunday evening saying Reid is willing to accept
a debt limit agreement that was largely negotiated by President Obama
and Senate Minority Leader Mitch McConnell.

“Senator Reid has signed off on the debt ceiling agreement pending
caucus approval,” said the statement from Reid’s office.

Reid will meet Sunday evening with Senate Democrats to make sure
that they can accept the package.

Reid met earlier in the day for nearly two hours with House
Minority Leader Nancy Pelosi.

House Speaker John Boehner is expected to confer with House
Republicans via conference call Sunday evening to discuss the agreement.

While Reid’s office confirmed his support for the debt ceiling
agreement, they did not disclose the accord’s details.

McConnell sketched out the broad elements of the agreement in two
Sunday morning news shows.

He said the agreement would increase the debt ceiling until the end
of 2012, cut spending by $1 trillion now and then cut spending by about
$2 trillion later in the year based on the work of special congressional
panel.

This panel would seek its cuts from both entitlement reforms and
tax reforms, McConnell said.

If a debt ceiling agreement is reached, it would be placed on the
Reid bill which is still pending in the Senate and voted on by the upper
chamber, possibly on Monday. It would then be sent to the House for a
final vote.

Passing a significant bill through both chambers in a few days is
certain to be difficult, especially since it will require a very unusual
coalition of Democratic and Republican lawmakers to support it.

The U.S. has already reached its $14.29 trillion debt ceiling.
Treasury Secretary Tim Geithner has said that Congress must pass
legislation increasing the debt ceiling by August 2, this coming
Tuesday.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]

A US senate vote on the latest debt deal is now looking highly unlikely before Monday according to a senior congressional aide, report Reuters.

The market has started to unwind its risk-aversion plays as the liklihood of a debt-ceiling deal improves greatly. Gold has opened below $1610/oz after seeing new record highs above $1630 on Friday night.

USD/JPY has steadied after its early push higher and USD/CHF has now taken over the lead.

A possibility of Washington agreement is encouraging USD buying as well as covering of risk aversion trades which of course makes USD/JPY an obvious play. It has now bounced almost 100 pips off it’s Friday night lows and is approaching short-term technical resistance near 77.70 and 77.90. We can expect to see trailing stop-loss orders above these levels.

EUR/CHF opened higher this morning on the prospect of a US debt-ceiling deal getting signed, trading to 1.1425 in early interbank fare after closing last week at record lows near 1.1300. It is presently giving back some of those gains, now trading near the previous low at 1.1370.

On the debt deal front, Democrat leader Reid says he hopes a vote will happen tonight and he will support the emerging deal pending approval from other Democrats.

Another record high in early interbank trade, .8815 the new mark. Prospects of a US debt-ceiling deal getting signed tonight doesn’t seem to be worrying the NZD bulls.

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