Asian session: Dollar weakens versus Euro, Yen, Franc; S&P cuts U.S.’s rating

Data released:
05:00   Japan Eco Watchers Survey: Outlook (Jul)     48.5

The dollar dropped to a record low against the Swiss franc and fell for a second day versus the yen after Standard & Poor’s downgrade of the U.S. added to concern the fiscal health of the world’s biggest economy is slipping.
The greenback weakened against the euro before the Federal Reserve meets tomorrow on monetary policy after S&P cut the U.S. one level on Aug. 5. S&P kept the outlook on the U.S. rating at “negative”. The rating may be cut to AA from AA+, the company said on Aug. 5 after markets closed.
Moody’s Investors Service and Fitch Ratings affirmed their AAA credit ratings for the U.S. on Aug. 2, the day President Barack Obama signed a bill. Moody’s and Fitch also said downgrades were possible if lawmakers fail to enact debt-reduction measures and the economy weakens.
Fed policy makers may address chances of further slowdown when the Federal Open Market Committee releases a statement tomorrow. Chairman Ben S. Bernanke told Congress on July 14 that central bank officials want to see if the economy rebounds and that they are keeping a close eye on inflation.
The euro also advanced after the European Central Bank signaled it’s ready to start buying Italian and Spanish bonds to curb the region’s debt crisis.
The yen gained versus most major peers as Asian shares slid for a fifth day, supporting demand for Japan’s currency as a refuge.
Gold jumped to a record, rising to more than $1,700 an ounce.

EUR/USD tested $1.4400, but failed to break above the figure to spurr correction. Rate was dragged lower after a release of weak Sentix index to print lows around $1.4325.
GBP/USD initially tested highs on $1.6470 before retreated to $1.6400. Rate currentl tries to recover.
USD/JPY holds within the Y77.70/90 range.

There is no key news for today.