New York Session – August 8, 2011 4:01 PM

The USD was mixed against the majors, gaining against the EUR, GBP, and commodity currencies and declining against the perceived safe havens CHF and JPY. Markets searched for safe havens amid increased financial turmoil as the European debt crisis remained in focus and the U.S. credit rating was downgraded one notch to AA+ from AAA for the first time ever. This did not see a decrease in the demand for U.S. Treasuries as yields pushed lower in a flight to quality. U.S. 10-year yields were sharply lower by about 21 bps to around 2.34%. President Obama was on the wires and noted that the ‘markets don’t doubt US’s ability to pay debts’ and that the U.S. will ‘always be a triple-A country’. The ECB purchased Italian and Spanish bonds effectively driving yields lower, however the EUR was unable to sustain gains. EUR/USD currently trades around 1.4210/15 which is down from session highs of about 1.4400. ECB President Trichet said that today’s bond purchases were significant and that the ‘euro is not at risk at all’. Full text »

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