Forexpros – Last week saw the U.S. dollar slump to a record low against the Swiss franc, as growing fears over a potential U.S. sovereign debt default and lingering concerns over the euro zone’s debt crisis boosted demand for the safe haven Swissie.
USD/CHF hit 0.8079 on Thursday, the pair’s all-time low; the pair subsequently consolidated at 0.8153 by close of trade, dropping 2.75% over the week.
The pair was likely to find support at 0.8079, Thursday’s low and the pair’s all-time low and resistance at 0.8330, the high of July 13.
Ratings agency Standard & Poor’s said late Thursday that the U.S. faced a 50% chance of a credit rating downgrade within the next 90 days, citing the political debate over raising the country’s USD14.3 trillion debt ceiling before the August 2 deadline.
The warning came a day after rival Moody’s Investors Service said it put the U.S. government’s Aaa bond rating on review for possible downgrade due to a “small but rising risk” of a short-lived default.
Meanwhile, Ireland became the third euro zone member to have its sovereign debt rating cut to junk status, following a downgrade by ratings agency Moody’s on Tuesday, citing the probability that the country will need an additional bailout.
Greece’s credit rating was cut three levels by ratings agency Fitch on Thursday to its lowest grade for any country in the world, saying that a default was a “real possibility.”
Fears that the region’s debt crisis would spill over to Italy saw the cost of insuring Italian government debt against default rise to a euro lifetime high.
Elsewhere, Swiss National Bank Vice President Thomas Jordan said on Thursday that the central bank was “monitoring the euro-franc exchange rate very closely,” after the Swissie surged to fresh record highs against the single currency for five consecutive days last week.
In the week ahead, euro zone finance ministers are to meet Thursday to focus on “the financial stability of the euro area as a whole and the future financing of the Greek program,” according to the president of the European Council, Herman Van Rompuy.
Markets will also be paying close attention to any developments in regards to the U.S. debt ceiling talks as well as a congressional testimony from Federal Reserve Chairman Ben Bernanke.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday, as there are no relevant events on this day.
Monday, July 18
The U.S. is to publish a government report on the balance of domestic and foreign investments.
Tuesday, July 19
The U.S. is to publish government data on building permits, an excellent gauge of future construction activity, as well as a report on housing starts.
Wednesday, July 20
The U.S. is to publish an industry report on existing home sales, a leading indicator of economic health, as well as government data on crude oil inventories.
Thursday, July 21
Switzerland is to publish government data on its trade balance, while later in the day the ZEW Centre for Economic Research is to publish a report on Swiss economic expectations, a leading indicator of economic health.
Later in the day, the U.S. is to release a weekly government report on initial jobless claims, while the Federal Reserve Bank of Philadelphia is to produce a report on manufacturing activity, a leading indicator of economic health.
In addition, Fed Chairman Bernanke is to testify on the Dodd Frank Act Anniversary, in Washington DC.
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