USD correction is delayed by the Congress - 29.7.2011

U.S. Dollar On Thursday, the dollar index was stable, trading just above the 74 figure. All European session the dollar was strenthening against the euro (1.44 - 1.4255) and remained in a narrow range against other currencies. Investors are beginning to get used to the idea that the U.S. credit rating may be downgraded from AAA level. Yesterday's Treasury announcement for the 7-year auction showed a record low yield of 2.28% in November 2010 at 2.63 coverage, so it is obvious that US dollar is not being avoided, or it is carefully masked. Quiet Asian session was broken by the news that Congress once again postpones the vote on the plan that could help to increase the U.S. debt-ceiling and avoid default. The dollar lost against all currencies, dropping from 74.3 to 74.05. Investors are constantly worrying about the statements of various officials, so the new head of IMF Lagarde said "the inability of the USA to raise debt-ceiling will undermine confidence in the dollar as a reserve currency". We are waiting for much economic data today (see calendar), we advise caution on the eve of weekend which could decide the issue of public debt. Euro A new wave of selling pushed the euro to lows in the European session. German Finance Minister Schaeuble, who declared that Germany had not liked the proposed by EFSF "carte blanche" in the form of output on the secondary market, has caused a great noise. In response, the yield on the Spanish and Italian treasury bills immediately jumped up. The fall was accompanied by reports of dealers of low liquidity, which would allow sales of the model accounts provoke a greater reduction. As usual in recent time Asian curruncies has supported the euro, causing a slight recovery against major currencies. Calendar for the eurozone is not an eventful one, and investors will be watching the yields, listening to the statements of various level officials. Silver We are positive about the prospects of the metal. The sharp correction in late spring let reduce the risk of negative effects of rising prices on demand, and the recent consolidation was a positive signal. It seems that the outflow of investment funds from the ETF, which led to a drop in stocks at 2,000 tonnes, is a temporary phenomenon, taking into account that all the factors that became drivers for 3,500 tons silver growth during the period from September 2010 to the end of April 2011 are still remain in force. Moreover, the current consolidation of the metal at sufficiently low levels may encourage buyers of physical metal to more activities and the positive signal to investors is a strong demand from industry, including jewelry.