Daily Market Report 05/12/12

Obama stands his
ground

Just into his second term, it appears the Barack Obama will
lead the US with more steel this time around. Standing up to the Republican House
Speaker John Boehner, the president insisted that top earners must take a tax
increase as the opposite parties fight to secure a deal to avoid the fiscal
cliff.

Obama stands his
ground

Just into his second term, it appears the Barack Obama will
lead the US with more steel this time around. Standing up to the Republican House
Speaker John Boehner, the president insisted that top earners must take a tax
increase as the opposite parties fight to secure a deal to avoid the fiscal
cliff.

Boehner wants to cut Obama’s social spending on schemes such
as Medicare, whilst avoiding Obama’s prioritised tax increases. A compromise,
that is both sufficient but not excessive, must be found between the two
parties must be found before the New Year to prevent the US and the global
economy being dragged into recession.

Such is the paramount importance of a solution, investors
have supreme confidence that congress will pull together. Resultantly the
dollar has consistently weakened to one-month lows and may continue to, until a
deal is reached. Conversely, benefitting from the risk appetite, the euro has
strengthened to a six week high.

Today Chancellor of the Exchequer George Osborne delivers his
Autumn Forecast Statement. Addressing the UK’s growth and budget prospects,
Osborne is expected to issue downgrades to both previous forecasts. This could
promote further charges from the euro whilst cushioning the dollar’s fall
slightly.

 

Key Announcements
Today:
  • 08.15am – EUR – Spanish Services PMI: 42.4
  • 08.45am – EUR – Italian Services PMI: 44.6
  • 09.00am – EUR – Final Services PMI: slight increase to 46.7
  • 09.30am – GBP – Services PMI: expected to increase to 51.1
    from 50.6
  • 10.00am – EUR – Retail Sales m/m: expected contraction to
    -0.1%
  • Tentative – EUR – Spanish 10y Bond
    Auction              
  • 12.30pm – GBP – Autumn Forecast Statement
  • 13.15pm – USD – ADP Non-Farm Employment Change: expected to
    decrease to 129k
  • 15.00pm – USD – ISM Non-Manufacturing PMI: expected at 53.6
  • 15.00pm – USD – Factory Orders m/m: expected to decrease,
    flat at 0.0%