Daily Market Report 03/12/12

Investor optimism for as long as US fiscal cliff progress continues

Following last week’s Greek progress, attention quickly turned to the US fiscal cliff. The positive developments from both sides increased investor risk appetite as the dollar weakened and the euro strengthened against many of their counterparts.

News that Germany may be open to future Greek debt write-offs reinforced last week’s sentiment, prompting early euro gains this morning. German Chancellor Angela Merkel stated that if Greece was able to achieve a budget surplus from 2014-2015, provisions for write-offs could be made.

This week investors will continue to assess the threat of the fiscal cliff. Any substantial advances will buoy the current attitudes to risk, continuing to weaken the safe haven dollar. Contrastingly if investors become restless about a perceived lack of progress within congress, we could see the dollar strengthen as market confidence retreats.

Though in recent months fundamental economic data has only played a supporting role in determining the current rates, manufacturing data out from the UK, US and Europe today could provoke fluctuations. Sterling could weaken today as manufacturing data is expected to show contraction for the seventh month, further indicating the stagnating economy.

 

Today’s Key Announcements:
  • 08.15am – EUR – Spanish Manufacturing PMI: down at 45.3
  • 08.45am – EUR – Italian Manufacturing PMI: down at 45.1
  • 09.00am – EUR – Final Manufacturing PMI: returned as expected at 46.2
  • All Day – EUR – Euro group Meetings
  • 09.30am – GBP – Manufacturing PMI: expected improved at 48.1
  • 15.00pm – USD – ISM Manufacturing PMI: expected to return as 51.5

 See previous Daily Market Reports