Little progress in the US was seen as the deadline to raise the debt ceiling approaches. The US dollar was exceptionally weak, plunging to a record low against the Swiss franc as risk of a downgrade escalated. Gold continued its long-term uptrend and ended the day at 1616.8, up +0.28%, amid safe-haven demand. Price climbed to a new all-time high of 1624.5 in Asia today. Oil prices traded with great volatility but small volume, slumping in early US session but then rebounding on weak USD. The front-month contract for WTI crude oil fell to as low as 97.76 before surging above 100 for the first time in more than 1 month. The contract ended the day at 99.59, up +0.39%. The equivalent Brent crude contract initially fell to a 5-day low of 116.53 but then rebounded to 119.05 and settled at 118.28, up +0.29%.

A House vote on the two-step plan by John Boehner has been delayed 1 day to July 28 as it also faces opposition among the Republicans. David Dreier, a Republican and the House Rules Committee Chairman, said that they want to ensure the plan is in 'full compliance'. The Democrats reiterated that they rejected the short-term proposal. While it's expected that the US would eventually reach an agreement and avoid a default, talks of US downgrade has remained hot. Moody's, Fitch and S&P put US' AAA rating under review last month and S&P reiterated on July 21 that there's at least 50% chance of a downgrade in the coming 3 months and a cut may come as soon as in August. The cost of a downgrade would be enormous. Some analysts forecast that Treasury yields will be increased by 60-70 bps, adding 100B a year to the burden.

Economic data released yesterday did little to affect the market. US consumer confidence rose to 59.5 (consensus: 57.9) in July from a downwardly revised 57.6 in June. S&P/Case-Shiller Composite-20 index contracted -4.5% y/y in May, accelerating from -3.96% a month ago but better than market forecast of -4.65%. New home sales surprisingly fell to 31.2K in June from a downwardly revised 315K in May. In line with expectations, UK's economy grew +0.2% q/q and +0.7% y/y in 2Q11.

Today's focus, apart from the progress of the debt ceiling negotiation, is on US durable goods orders and Fed's Beige Book. The RBNZ will meet for rate decision but we expect no change in the monetary stance.