Hopes of a congress deal weakens the dollar
Still supported by the confidence in congress’ ability to find a solution to the US fiscal cliff, the dollar has been gradually weakening, as risk sentiment switches on.
Despite only intimations from insider parties, people are willing to believe that progress is being made, even though little discernible strategy has been publicly released.
Numerous senior congressional members have spoken in the last week about their optimism that a deal can be thrashed out, this has seen investors take a similar optimistic stance as they search for greater returns in riskier currencies.
President Obama hopes that a deal could be conjured before Christmas, this still leaves plenty of time for fluctuating crises in confidence, however if correct, we could see protracted dollar weakness.
Once the impending $607bn planned austerity has been sidestepped, we may see investors take a step back, and once again assess the difficulties that face the global economy. For now though as long as confidence persists, the trend could be a deteriorating dollar against its risker counterparts.
Key Announcements Today:
- 07.00am – German Retail Sales m/m: heavily down at -2.8%
- 07.45am – French Consumer Spending m/m: slightly down at -0.2%
- 08.00am – EUR – ECB President Draghi Speaks
- 10.00am – EUR – CPI Flash Estimate y/y: expected at 2.4%
- 10.00am – EUR – Unemployment Rate: expected to slight increase to 11.7%
- 13.30pm – USD – Personal Spending m/m: expected to fall to 0.1%
- 14.45pm – USD – Chicago PMI: expected to improve to 50.7