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Forex pairs in this Article » EUR/USD (Barcelona) - The uncertainty created by the US fiscal disagreement is playing against the attractiveness of the USD, notes Greg Gibbs from RBS.

Key Quotes

"The possibility of a deep and sharp fall in US growth and frozen global capital markets on complete deadlock in Congress beyond reaching of the debt ceiling is yet to take hold of markets."

"If the later global risk aversion scenario were to take hold we should expect widespread falls in global equities and emerging
currencies. We may see falls also in EUR and GBP, although this is less clear, and JPY should rise. But in the back of the market’s mind is that even if this happens it will probably be temporary."

"The likelihood that the US government goes into prolonged fiscal shock is low. However, the longer term implications are that the market and the US people will take a dimmer view on the US government and economy."

"As it goes through a pattern of repeatedly choking itself, growth remains sub-trend and the Fed prolongs its quantitative policy easing. As such, the medium term assessment is that this is more negative for the USD than it is for global risk appetite."
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