Boehner’s concession shows first signs of fiscal progress
In the US, the Democrats and Republicans are inching towards finding a solution to the fiscal cliff, though progress is still quite preliminary considering the deadline is just two weeks away.
Republican House Speaker John Boehner ceded ground, edging closer to President Obama’s key demands, including tax raises for the highest earners. He maintained that Obama would have to cut social spending, but the sign of movement was enough to reinforce the underlying optimism that has seen the dollar weaken against the majority of its peers.
Without any drastic changes in confidence, the trends suggest that the greenback will continue to weaken as we edge towards a deal. If however, any announcement casts doubt on the US’ ability to conclude a deal before 1st January, we may see the dollar gain strength on the uncertainty.
Over the weekend, Japan’s elections finished in an unsurprising win for the Liberal Democratic Party. Comprehensive victor, Shinzo Abe, has been aggressively pushing for unlimited easing and a readjustment of the nation’s inflation target in order to reinvigorate Japan’s protracted slump. The prediction that Abe’s party would emerge victorious has seen the yen weaken nearly five percent in recent months, reaching 18-month lows against sterling.
Today’s Key Announcements:
- 10.00am – EUR – Trade Balance
- 13.30pm – USD – Empire State Manufacturing Index: expected at -0.7
- 14.30pm – EUR – ECB President Draghi Speaks