USA has reached its overdraft limit

Published on in Foreign Exchange News by

Foreign Exchange Overnight/Morning Ranges:

Rates EUR/USD 1.4027-1.4126

Rates GBP/USD 1.6066-1.6128

Rates GBP/EUR 1.1407-1.1473

USA has reached its overdraft limit and needs to do some cost cutting before it can borrow more money, but deadlocked over where the savings should come from as USA is the approaching debt ceiling deadline. Ratings agencies S&P and Moody’s have both warned that the USA’s AAA credit rating is at serious risk and there is the looming prospect of a default on US government bonds.

The Euro is lower again as we open the week. A Euro summit this Thursday is planned to try and find a resolve to Greece’s problems. German Chancellor Merkel upped the ante at the weekend calling for a large contribution from private investors and added that she would  not attend unless there was a firm plan in place.

But ECB’s Trichet stated that they would not accept Greek bonds as collateral if they were deemed in default by ratings agencies.

Sterling rose to a 1 ½ month high against the euro this morning, touching €1.1478/£1 as a lack of confidence in the euro saw it lose ground across the board due to 8 banks failed the latest E.U. stress tests. Both Sterling and the USD benefit as investors view developments in Europe as more serious whilst the bargaining on tax hikes and spending cuts continue in the USA.

EUR/USD currently 1.4048. Support 1.3900, resistance 1.4200.

GBP/USD currently 1.6118. Support 1.6000, resistance 1.6300.

GBP/EUR currently 1.1473. Support 1.1350, resistance 1.1600

Oil $ 96.79   Gold $ 1599

Dow +0.34%     FTSE -0.72%    Nikkei +0.39%


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