Tuesday, August 2, 2011

Okasan Securities: bearish view on US dollar

The House of Representatives approved legislation to raise the US debt limit by at least $2.1 trillion and cut federal spending by $2.4 trillion or more. The measure goes to the Senate for a final vote planned today. Such increase of the debt ceiling should be enough to fund the government until 2013.

Analysts at Okasan Securities believe that the markets will wonder whether the debt agreement will work. Another source for concerns is the potential negative impact the spending cuts may weigh on growth. The specialists claim that US currency won’t manage to show sustainable growth.

According to the data released yesterday, the ISM Manufacturing PMI fell from 55.3 to 50.9 in July, the lowest level since July 2009.

Analysts at ANZ note that the level of confidence in the US and its medium-term growth outlook has been seriously damaged. The specialists point out that the administration of the world's largest economy has problems where it shouldn’t have. In their view, dollar will find itself under a very negative pressure.

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