EU session review: Dollar fell to record versus Franc

Data released:
06:45     France     Consumer confidence (July)    86    81    83
08:30     UK     GDP (Q2) preliminary    0.2%    0.1%    0.5%
08:30     UK     GDP (Q2) preliminary Y/Y     0.7%    0.7%    1.6%

The dollar fell as President Barack Obama said the U.S. may experience a “deep economic crisis” if leaders fail to reach a compromise on spending cuts and the nation defaults.
The U.S. currency slid below Y78 versus yen for the first time since March and fell to a record versus the Swiss franc as lawmakers struggled to reach an accord to raise the nation’s $14.3 trillion debt ceiling by an Aug. 2 deadline.
“The uncertainty is a clear negative for the dollar across the board,” said Niels Christensen, chief currency strategist at Nordea Bank AB. “Until we have more news, I can’t see sentiment changing.”
Obama blamed the current stalemate on a group of Republicans in the House who are insisting on budget cuts and no tax increases. “If we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy,” Obama said.
The pound rallied from a two-week low against the euro after the U.K. economy expanded for a second quarter.
The British economy expanded by 0.2% in the second quarter, down from 0.5% in the first three months of the year, the Office for National Statistics said today. GDP would have grown by 0.7% without special factors such as Japan’s earthquake, an extra holiday for the royal wedding, and unusually warm weather in April, the statistics office said.
“The market was positioned for a weak number, so this flicker of hope that the U.K. isn’t about to fall back into recession helped boost sentiment to sterling,” Kathleen Brooks at Forex.com.
Gains in the yen were limited on speculation Japanese officials will intervene to weaken the currency.
Japanese Finance Minister Yoshihiko Noda said currency moves have been one-sided and he will continue to watch the yen closely. Bank of Japan Governor Masaaki Shirakawa said yesterday that the yen’s strength could hurt the economy and the central bank is ready to take appropriate action as needed.

EUR/USD continues to hold within the narrow range. Rate earlier fell from highs on $1.4523 to the lows around $1.4462. Offers remain at $1.4520/25 with stops above.

GBP/USD recovers to current $1.6401.Resistance seen at $1.6400/05, a break to expose earlier highs at $1.6414. Offers
noted near highs, strengthening toward $1.6420.

USD/JPY printed session lows on Y77.85 before recovered to Y78.20. But rate failed to hold above and retreated to the figure.

US data start at  1400GMT by both New Home Sales as well as Consumer Confidence data and the Richmond Fed Manufacturing Index.