• Republicans: Large scale debt deal with Obama not possible
  • Democrats: Republican plan a non-starter
  • Gold makes new record highs above $1624/oz
  • Australian goods PPI +0.8% QoQ, as expected
  • UK home prices still falling: Hometrack
  • BOJ Governor: Yen rise still poses risk to Japanese economy
  • Regional bourses fall by around 1%

The market has moved quickly on from the EZ debt problems to those of the US. Their failure to reach any sort of agreement on raising the debt ceiling is spooking the market, with Gold making record highs and equity markets falling.

The USD opened lower on FX markets with USD/CHF again the main mover. The twin factors of USD avoidance and risk-aversion saw plenty of early selling in USD/CHF. It opened in interbank trade at .8130, down from a NY close near .8180, and has traded .8110/54 all told. EUR/CHF also fell with obvious risk aversion, trading 1.1678/1.1717 after closing on Friday at 1.1785.

EUR/USD ran into some heavy selling near 1.4420 when it tried to rally in early trade on USD woes. Cross selling has weighed since then. EZ debt woes have taken a back seat for now with the focus elsewhere. Ranges: 1.4355/1.4417

USD/JPY also opened lower, trading to 78.10 in early interbank trade, but dealers were happy to buy dips ahead of some big standing orders near 78.00. Ranges: 78.10/55, EUR/JPY 112.50/99

AUD/USD has been quite subdued in a 1.0808/52 range with NZD/USD trading .8617/56

Cable range 1.6286/1.6331, EUR/GBP .8809/32