Forexpros – The U.S. dollar was sharply lower against the safe haven Swiss franc on Monday, falling to a fresh record low after Standard & Poor’s downgraded the U.S. debt rating for the first time in history, boosting demand for safe haven assets.
USD/CHF hit 0.7526 during European morning trade, an all-time low; the pair subsequently consolidated at 0.7595, retreating 1.01%.
The pair was likely to find short-term support at 0.7526, the daily low and the record low and resistance at 0.7739, last Friday’s high.
Ratings agency Standard and Poor’s downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA after markets closed Friday.
The ratings agency kept the U.S. rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.
S&P said the debt ceiling deal reached by lawmakers to cut the federal deficit by an estimated USD2.1 trillion over a decade did not go far enough and “America’s governance and policymaking is becoming less stable, less effective, and less predictable than what we previously believed.”
U.S. Treasury Secretary Timothy Geithner sharply criticized S&P’s decision, saying the ratings agency “has shown really terrible judgment and they’ve handled themselves very poorly”.
Leaders from the Group of Seven leading economies said Sunday that they were ready to take every action necessary to stabilize financial markets.
“We are committed to taking coordinated action where needed, to ensuring liquidity, and to supporting financial market functioning, financial stability and economic growth,” the G-7 said in a statement.
The Swissie was also higher against the euro, with EUR/CHF dropping 1.07% to hit 1.0841.
The European Central Bank said late Sunday that it “will actively implement” its bond-buying program, indicating that it will likely buy Spanish and Italian government bonds.
Also Monday, official data showed that Switzerland’s unemployment held steady at a seasonally adjusted 3.0% in July, as widely expected.
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