After U.S. Supercommittee members failed to reach an agreement to cut the U.S. deficit by at least $1.2 trillion, an automatic spending cuts will be activated now and are due to begin in 2013. Rating agencies said that there will be no immediate impact on the U.S. credit rating, which supported the sentiment to improve and spread a slight wave of optimism across the board.
The U.S. dollar lost positive momentum today, where we can see high yielding currencies rebounded to the upside today as the sentiment improved slightly after European leaders started to pressure Greek political leaders to end the political instability and provide a written acceptance of the second bailout deal as soon as possible, where European lawmakers aim to provide Greece with the next tranche of 2010's bailout package.
The U.S. dollar index (USDIX) opened the session today at 78.31, and recorded the highest at 78.43 and the lowest at 77.97, and is trading in the moment at 78.10.
European leaders have finally recognized that time is running out and they should act in unity to tackle the debt crisis and accelerate the implementation of the decisions and plans previously approved in order to support the euro-area region to rebound and record growth.
Eyes are focused on European Bonds yields, where today Spain sold 3.0 billion euros of short-term bills; however, yields on those bonds surged to records, raising fears that Spain couldn't handle the mounting debt, and soon will not be able to access the capital market as the cost of borrowing is skyrocketing.
Spain sold 0.97 billion euros of 6-month bills, while yields on those bills climbed to 5.227% from 3.302% recorded in October. In addition, Spain sold 2.01 billion euros of 3-month treasury bills, with yields rising to 5.11% from 2.292% a month earlier.
But on the other hand, the euro was able to hold on some of the gains recorded earlier today on a positive outlook that lawmakers will soon provide markets with more steps and measures to tackle the debt crisis and prevent it from spreading further, as they aim to maintain market stability and stop yields from rising further, with all eyes are looking forward to the euro-zone finance ministers meeting on November 29.
The EUR/USD pair opened the session in Asia at $1.3487, and recorded a high of $1.3568 and a low of $1.3468, and is trading now around $1.3540.
The royal currency fluctuated heavily against the U.S. dollar, despite the upbeat public finance figures from the United Kingdom released earlier today, where the GBP/USD pair started the day at $1.5639 and fluctuated heavily between a high of $1.5691 and a low of 1.5618, and is hovering around 1.5637 in the moment.
Moreover, the Swiss franc gained strength against the U.S dollar after the trade balance figures showed that Switzerland's trade surplus widened in October to 2.15 billion franc from 1.85 billions, where after opening the session at 0.9170, the USD/CHF pair set the highest at 0.9185 and the lowest at 0.9106, and is trading now around 0.9126