Deadlocked In D.C.

The EUR, GBP, and AUD all made strides against the USD on Monday as politicians in the States remained deadlocked. The Debt Ceiling debate is causing tempers to rise in Washington D.C. and investors are starting to become weary of the gridlock. At the core of the debate in D.C. are arguments concerning spending cuts that would have to be agreed on by both sides of the political aisle in order to ratify a Debt Ceiling increase which would allow the U.S. to allocate a higher percentage of its net worth for the selling of bonds. Republicans and Democrats are using this occasion to obviously play politics as national elections approach next year. Gold rose to record levels on Monday as investors continued to show a taste for perceived safe havens. In the meantime global equity markets including Wall Street’s major indexes all turned in mixed results. The EUR has now gained substantially against the USD over the past few trading sessions since the advent of a European package for the Greek debt crisis.

The European debt situation certainly has not been solved in its entirety and is likely to climb back into the news. However, the wrangling that is taking place on the other side of the Atlantic has called into question the ability of the Americans to handle their own problems, which amounts to the world’s problem if the worst should somehow come to pass. Most investors have not completely thrown in the towel regarding the States though and it remains very unlikely that the U.S. would put itself in a position which would create a default scenario. Having said this, the politicians in America must find a compromise relatively soon in order to calm the feathers of investors who are turning cautious. The U.S. will see a host of data today including New Home Sales, the CB Consumer Confidence reading, the S&P/CS Composite-20 HPI, and the Richmond Manufacturing Index. Yet unless one of these reports completely misses its estimate the focus shall remain on Washington D.C. and the debate that rages between Congress and the White House. The USD has taken a beating the past few sessions and finds itself on the weaker side of its range. This in itself may prove an opportunity for traders with a strong stomach. However, it is never safe to stand in front of an incoming train.

The EUR has done well since Europe has issued their latest thrust into the confidence game that they are playing with the Sovereign Debt situation. Many questions remain about the long term dilemma that the E.U. and many of its nations face financially. The shadows of the debt crisis however have been outweighed by what is taking place in the States and until a resolution is in sounded from across the ocean the EUR may find additional backing.  The German GfK Consumer Climate reading will be presented today, data from Germany has been rather lackluster the past few weeks and this result may prove of interest to those paying attention.

The U.K. will publish its Preliminary GDP report today and an expectation of 0.2% is being sought. The economy across the U.K. has been weak and today’s number could prove interesting for the GBP which has seen pressure the past few months. The gains that Sterling has made the past few sessions against the Greenback could prove noteworthy if this GDP report comes in weaker than expected. The Bank of England continues to take a dovish monetary stance and the Sterling could prove to be an interesting trade quite soon.

Gold found itself at record highs on Monday and of this morning’s writing is around 1613.00 USD, which is off of its highs but still a solid price for the precious metal. Other commodity markets proved difficult yesterday. Crude Oil although near highs has been rather consolidated and the grains have turned in mixed results for a few weeks now. The AUD is near the top of its chart against the USD and traders may be tempted to test its momentum. The JPY also has inched towards stronger values against the USD.

Plenty of noteworthy values are being seen across the Forex and Commodity markets and traders have many places to look in order to test overall sentiment.