Obama vs. Boehner –
Round 3

Today President Obama and Republican House Speaker John
Boehner meet for the third time to discuss the US fiscal cliff. Both sides
brand the other unreasonable, or not serious, in their pursuit of a solution
for the impending tax cut expiries, spending cuts and tax rises.

Obama vs. Boehner –
Round 3

Today President Obama and Republican House Speaker John
Boehner meet for the third time to discuss the US fiscal cliff. Both sides
brand the other unreasonable, or not serious, in their pursuit of a solution
for the impending tax cut expiries, spending cuts and tax rises.

Ordinarily a lack of progress frustrates the markets,
however the importance of securing a deal has seen an innate confidence and
composure that one will be found. Resultantly, this assuredness has seen the
dollar weaken against its counterparts as investors’ risk appetite increases.

The euro is performing very well even though the region’s
economic data does not corroborate this. Profiting from the risk sentiment, whilst
being reinforced by Greece’s bailout and an assembly of a euro area banking
supervisor, the euro has seen gains of around 1% this week.

In other news, which may force the pound lower, Standard and
Poor’s has downgraded the UK’s outlook to negative, bringing under scrutiny the
AAA rating it so cherishes. Joining Moody’s and Fitch, S&P was the final of
the big three to dim the light on the UK following George Osborne’s step away
from tackling national debt. As the UK economy continues to stutter, tackling the
debt appears to have been demoted in the list of the chancellor’s priorities.

Today a host of services and manufacturing data is released
and the EU summit continues, though the most impacting event of the day will be
the meeting between Obama and Boehner.

 

Key Announcements
Today:

• 08.00am – EUR – French Manufacturing PMI: similar to
  expectations at 44.6
• 08.00am – EUR – French Services PMI: similar to expectations
  at 46
• 08.30am – EUR – German Manufacturing PMI: down at 46.3
• 08.30am – EUR – German Services PMI: up at 52.1
• 09.00am – EUR – Manufacturing PMI: expected at 46.6
• 09.00am – EUR – Services PMI: expected at 47
• Day 2 – EUR – EU Economic Summit
• 10.00am – EUR – CPI y/y: expected to remain at 2.2%
• 13.30pm – USD – Core CPI m/m: expected flat at 0.2%
• 14.00pm – USD – Manufacturing PMI: expected at 52.6
• 14.15pm – USD – Industrial Production m/m: expected to rise
  to 0.3%