Without sounding like a broken record, Fiscal Cliff negotiations continue to dominate currency markets, despite figures released yesterday showing the world’s biggest economy, the US, showing signs of growth.
Fiscal Cliff talks stalled yesterday after Republican leader Boehner was forced to withdraw his plans for the Fiscal Cliff due to the unwillingness of some members of the Republican Party to vote for a bill that included a tax increase. The delay to come to an agreement supported the US dollar and Yen in overnight trade as well as causing Asian stock markets to fall, citing the appetite for riskier assets amongst investors to dwindle. European stock markets have also opened lower supporting the risk aversion attitude amongst investors.
Given that Sterling/US dollar continues to find resistance at the yearly highs, the delay in any agreement over the Fiscal Cliff and also profit taking amongst large institutions, we are likely to see US dollar strength over the European session.
UK GDP figures just released has shown that the UK economy has grown 0.9%, falling below the expected 1%. This may also put further pressure on any further rises for the Pound
Key Announcements Today:
13.30pm – USD – Core Personal Consumption Expenditure: Previous figure was 1.6%
13.30pm – USD – Reuters/Michigan Consumer Sentiment Index: expected to increase 74.7