Wednesday, July 27, 2011

US Finance Market Condition

Not yet agreement about the increase in U.S. debt limit before the August 2 deadline to make the U.S. dollar slumped further. The U.S. dollar has fallen sharply since President Barack Obama revealed his arguments against the Republican party in front of the U.S. public.

In trading Tuesday (26/07/2011), U.S. dollar slipped almost 1% against Euro. Euro is sold at U.S. $ 1.4516, higher than the level of U.S. $ 1.4375 in earlier trading.

The U.S. dollar also dropped against currencies' safe-haven Swiss franc, to as low as 0.8012 francs, and fell against the yen to positions 77.94 yen. Pound Sterling also rose sharply against the dollar at U.S. $ 1.6422, compared to earlier in the U.S. $ 1.6278.

The biggest concern of investors is the political impasse that could cause the U.S. government ran out of money to pay bills and debts on August 2. Obama administration had to fight hard to obtain the approval of U.S. debt limit increase of $ 14.3 trillion before the deadline.

But investors in the U.S. bond markets give different messages to U.S. politicians, despite the prospect of U.S. debt rating could go down due to not yet reach an agreement on the debt. U.S. debt yields 10-year futures declined 2.95% from 3%, while the 30-year bond futures fell to 4.27% from 4.32%. And U.S. finance ministry is easy to do an auction of 2-weeks futures bond for U.S. $ 24 billion, and also the 2-year bonds amounting to U.S. $ 35 billion managed to get a good price.

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