USD/CHF on session lows, US debt-limit debates in focus

US dollar slipped to its lowest point for the day against the Swiss franc, as market players remained wary amid continuing negotiations over the US debt ceiling and as concerns of a potential default grew.

USD/CHF touched a session low at 0.9102 at 11:37 GMT, after which consolidation followed at 0.9108, losing 0.16% on a daily basis. Support was likely to be received at October 14th low, 0.9064, while resistance was to be met at August 28th high, 0.9235.

On Tuesday it became clear that Fitch Ratings, the only ratings agency, that still has an AAA rating on the United States, put US Treasury bonds on “Rating Watch Negative”. This could be considered as a signal that Fitch was intending to reduce its rating on US sovereign debt.

At the same time, the Senate leaders in the United States were rushing to reach an agreement in order to end the fiscal crisis, as the latter gained intensity after Republicans’ last minute deal failed on Tuesday. The emerging Senate accord might be announced as early as today, though its passage in the Republican-led House of Representatives was still far from assured.

A “clean” Senate bill to fund the US government and increase the debt ceiling would pass the House and, at the same time, if offered by the Senate, it will be presented for a vote by House Speaker Boehner, according to Pennsylvania Republican Representative Charles Dent in an interview on CNN. Texas Republican Ted Cruz, who has led a campaign against President Barack Obama’s health-care law, has left open the possibility that the debt-ceiling measure could be delayed. In case any of the 100 senators chooses to delay it, a vote could be pushed to as late as next week, Bloomberg reported.

Meanwhile, in Switzerland, a report by the ZEW institute showed that the index of economic sentiment advanced to a reading of 24.9 in October from 16.3 in September, while estimates pointed a lesser advance, to 21.0 in October.

Elsewhere, the Swiss franc was unchanged against the euro, with EUR/CHF cross trading at 1.2344 at 12:06 GMT. A report showed earlier that the harmonized index of consumer prices (CPI) in the Euro zone slowed down in September in consonance with projections, reaching its lowest point in three and a half years. This implied that inflationary pressure was decreasing, as economic recovery was still frail and domestic demand – quite insufficient. The annual CPI decelerated to 1.1% in September, or the lowest level since February 2010. Consumer prices rose 0.5% in September compared to August, also in line with expectations, as decreased prices of food and tobacco have been neutralized by considerably higher prices of industrial goods, excluding those in the energy sector.

Additionally, Eurostat reported that Euro blocs trade balance registered a surplus at the amount of 7.1 billion EUR in August, or the largest surplus since August 2002. Seasonally adjusted trade balance also recorded a surplus, amounting to 12.3 billion EUR in August, which implied a stable demand for European goods and services in other countries. In July the surplus figure has been revised down to 11.0 billion EUR from 11.1 billion EUR previously. Experts had expected a surplus of 11.8 billion EUR. Exports increased during the same period, while imports remained almost without change. All in all, the above mentioned trade data suggested that the common currency zone has achieved a certain progress in re-balancing its economy, despite restrained recovery in the recent months.

GBP/CHF pair was losing 0.06% to trade at 1.4594 at 12:06 GMT.