A fiscal cliff deal, the present that America wants so desperately for Christmas
As we edge towards Christmas, we are edging towards a fiscal cliff deal. President Obama and Republican House Speaker John Boehner have been going back and forth trying to negotiate terms that appease their respective parties and it looks like finally, in time for Christmas, the discussions will reach a conclusion.
Raising taxes is seen as a necessity for the States, but at what income levels they are ameliorated is causing great debate. Obama is pressing for households earning more than $250,000 to be taxed at a higher rate, whilst Boehner wants earnings only above $1,000,000 to be levied with a new rate.
Despite the disparity between the two figures, investors are confident that a compromise for the deal will be found. Resultantly the dollar has tumbled against the majority of its peers, sitting very close to a one-year low against sterling and a seven-month low against the euro, representing a great time to buy dollars.
The festive season seems to be having positive effects on other regions too. Greece has very generously been given a ratings upgrade; Standard & Poors lifted the nation from Selective Default to B-, citing strong determination of euro area governments to keep the currency region together.
Good German business climate data has also been released this morning, further adding to strength against almost all of its counterparts. The pound is the sole currency outperforming the euro, buoyed by the 2.7% inflation rate yesterday, the figure suggesting that further quantitative easing will not be required just yet.
Key Announcements Today:
- 09.00am – EUR – German Ifo Business Climate: up at 102.4, expected at 101.9
- 09.00am – EUR – Current Account: returned at 3.9B
- 09.30am – GBP – MPC Meeting Minutes
- 11.00am – GBP – CBI Realised Sales
- 13.30pm – USD – Building Permits: expected to marginally increase to 0.88M
- 13.30pm – USD – Housing Starts: expected at 0.87M