The U.S. Dollar and the Japanese Yen benefitted from risk aversion in the free Forex which occurred as the U.S. Congressional super-committee failed to agree on deficit cuts.
Meanwhile, the Euro slipped as Spain became the fifth European nation to replace their socialist party due to the debt crisis. Mariano Rajoy, leader of the People’s Party, beat the candidate for the socialist party, Alfredo Perez Rubalcaba. Traders are said to be paying record highs for the right to sell the 17-nation currency; according to analysts, this may be a sign that the Euro will continue to decline amidst worries that the Euro region will not be able to contain the debt crisis. The shared currency dipped further as Moody’s Rating Agency warned France it may lose its AAA credit rating given the hike in borrowing costs.
Other FX news showed that the Pound Sterling slipped to a one-month low against the greenback after metrics revealed that U.K. home prices declined the most in one year on concerns that the economy in the country is deteriorating. The British currency slumped versus the Yen after Prime Minister David Cameron stated that Great Britain is “well behind” where it ought to be in regards to economic growth.
The Canadian Dollar also declined as the U.S. failed to produce an agreement to reduce the deficit. Lastly, the New Zealand Dollar dipped the most in one month as the budget impasse dampened demand for risk in the currency market.