Forex - USD/CAD hits daily low as U.S. debt impasse weighs

Forexpros – The broadly weaker U.S. dollar fell to a daily low against its Canadian counterpart on Monday, as a lack of progress in talks aimed at raising the U.S. debt ceiling added to fears over a possible default, weighing heavily on the greenback.

USD/CAD hit 0.9454 during early U.S. trade, the daily low; the pair subsequently consolidated at 0.9466, slipping 0.13%.

The pair was likely to find support at 0.9423, Friday’s low and a three-and-a-half-year low and resistance at 0.9530, Fridays high.

Talks between U.S. President Barack Obama and Republicans broke down late Friday, after the Senate rejected a USD3 trillion deficit reduction plan, adding to fears over a potential default ahead of August 2 deadline to raise the country’s USD14.3 trillion debt ceiling.

Both Moody’s Investors Service and Standard & Poor’s have placed their credit ratings on U.S. debt on review for a potential downgrade.

House Speaker John Boehner told Republican lawmakers on a conference call Sunday evening that no "grand deal" on raising the debt ceiling was possible with President Obama.

The Canadian dollar was also higher against the euro, with EUR/CAD slipping 0.11% to hit 1.3594.

Earlier Monday, Moody's cut Greece’s sovereign debt rating by three notches to Ca, just one notch above default, after euro zone leaders last week agreed to another EUR109 billion in aid for the indebted nation, combined with EUR37 billion from the private sector.

Moody’s said the new aid package set a negative precedent for the creditors of other indebted nations.

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