This past week we saw uncertain market condition as the debt ceiling issue in the U.S. and the bailout talks in EU both stalled. With the EBA Bank Stress Test results fail to inspire confidence, market sold off both Euro and US Dollar at the beginning of the week.

Then sentiment changed for Euro after a successful bailout agreement was reached on late Thursday during the emergency summit… The market was optimistic because the deal was broader than some expected, adding provisions that lowered bailout loan interest rates not just for Greece, but for Ireland and Portugal as well. The rollover of debt triggers automatic rating change by all three major ratings agencies to selective default, and Fitch has already done just that, while S&P and Moody’s have yet to release their findings, which are likely to take place early next week.

In Washington, the debt ceiling negotiations was counterproductive with various members to the debate refusing to compromise to get a deal done. The House passed the GOP’s ‘cut, cap and balance’ plan while the Senate defeated on a party line vote. President Obama’s attempt to reach a ‘grand bargain’ with Speaker Boehner totally fell apart, and right now there are no other plans at all under consideration as we know of. As of Friday afternoon, Federal Reserve and US Treasury officials were meeting to prepare for possible debt market turmoil, though leaders in both parties still insist the US will not go as far as a default… Market remains uncertain over the future of USD, therefore dollar remains weak at the close of the week.

GBP, EUR, NZD, and AUD all gained against USD last week, with NZD showing another impressive run of 2.5% of gain. Market sentiment is likely to remain the same this week unless the US debt ceiling is raised.

Here’s a list of this week’s tradable releases:

Tue July 26, 2011 – 4:30am EDT – UK Prelim GDP q/q
Tue July 26, 2011 – 10:00am EDT – US New Home Sales
Tue July 26, 2011 – 9:30pm EDT – AU CPI q/q
Wed July 27, 2011 – 5:00pm EDT – NZ Official Cash Rate
Fri July 29, 2011 – 8:30am EDT – US Advanced GDP q/q

… on Friday we’ll also get CA GDP at the same time, but we’ll just focus on the US release as it is probably a better news to trade.