By: Barbara Zigah

With the focus temporarily off of the Eurozone, investors shift their attention to the United States and the impending deadline for establishment of a new debt ceiling. As a result, the U.S. Dollar is under significant pressure on growing concerns that the policymakers there will fail to reach a deal and a debt default will ensue. As reported at 3:04 p.m. (JST) in Tokyo, the U.S. Dollar fell against the safe haven Japanese Yen to 78.12 Yen, a 4-month low; against the ultimate safe haven, the Swiss Franc, the greenback lost 0.6% of its value falling to 0.8132 Swiss Francs, just off the record low struck last week. One senior strategist in Tokyo noted that it appears that only short-term market players are in on the action this week, with no one wanting to get locked into anything long term.

While the markets are fairly certain that the U.S. will take the necessary steps to avoid a debt default, the political posturing leading up to it is exacerbating the jitteriness of the markets. Even the White House confirmed that there was likely “a few stressful days” in store for the financial markets. Even if the U.S. is able to find the funds to meet its obligations if the August 2nd deadline is reached, there’s little doubt among investors that the U.S.’s prime credit rating is in jeopardy of a downgrade.