The dollar recovered some ground against the Swiss franc and the yen on a combination of healthy US data, better corporate earnings and potential progress on the debt ceiling. President Obama warmed to the “Gang of Six” deficit reduction plan and senior lawmakers in the Senate intimated that the measure could pass with relative ease. However, the House is a much tougher proposition and it remains to be seen whether comprehensive legislation can be passed and signed into law before the Aug. 2 deadline. In another sign of the potential consequences of failure to achieve a deal, Moody’s warned that five states could also lose their AAA rating due to their reliance on federal revenue. In the Eurozone, Reuters reported that French President Sarkozy would meet with German Chancellor Merkel ahead of the Thursday EU Summit. On the data front, US housing starts and building permits surprised to the upside. EURUSD traded 1.4109-1.4182 and USDJPY 78.89-79.32. Continue reading →