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(Reuters) – The euro and dollar both struck record lows against the Swiss franc in Asia on Monday while gold reached new highs as investors sought safety from debt problems plaguing the European Union and United States.
The euro gapped lower against the Swiss franc to change hands at a trough of 1.1365 according to dealers, down from 1.1501 late in New York on Friday.
Likewise the dollar traded as low as $0.8034 on EBS, against $0.8129 late on Friday, while gold popped as high as $1,598.41.
“We have limited hope that a comprehensive solution to the European and US problems will emerge in the next few days, or that there will be increased clarity in the global economic outlook,” said analysts at Barclays.
“Hence, we expect the very nervous, illiquid trading conditions of recent weeks to continue…we recommend limited risk exposures.”
All of which kept the euro pinned at $1.4124, against $1.4144 late on Friday. Immediate support was put at $1.4063 with resistance at $1.4199.
The single
currency escaped relatively unscathed from the EU bank stress tests released on Friday, though dealers said the market had little confidence in the results.
Attention had shifted to the next emergency meeting of EU leaders scheduled for Thursday, amid signs they are edging nearer to a proposal to buy back Greek debt.
German Chancellor Angela Merkel called on Sunday for private investors to make a major contribution to bailing out
Greece. Officials proposed a range of schemes for the European Financial Stability Facility to finance a buy-back or a swap in which private owners of Greek government bonds would accept cuts in the face value of their holdings.
Meanwhile, in the United States there was little evidence of progress on raising the country’s borrowing ceiling ahead of a deadline of August 2.
Republican and Democratic senators sought on Sunday to craft a plan that could avert a government debt default should the talks remain stalemated.
Senior Democratic aides said the U.S. Senate will likely begin considering the compromise measure this week. They predicted the Democratic-led Senate would pass the legislation, but winning over the Republican-led House of Representatives would pose a bigger challenge.
Both Standard & Poor’s and Moody’s have warned they could downgrade the country should the debt limit not be raised.
One early mover in Asia was the New Zealand dollar, which climbed after domestic inflation data proved higher than expected, adding to speculation that interest rates might rise before year end.
The kiwi rose to $0.8470, from $0.8445 before the government reported consumer prices rose 1 percent in the second quarter. Last week, it hit a 30-year peak of $0.8507 as growth figures showed the
economy faring better than expected.
