Boehner’s concession
shows first signs of fiscal progress

In the US, the Democrats and Republicans are inching towards
finding a solution to the fiscal cliff, though progress is still quite
preliminary considering the deadline is just two weeks away.

Boehner’s concession
shows first signs of fiscal progress

In the US, the Democrats and Republicans are inching towards
finding a solution to the fiscal cliff, though progress is still quite
preliminary considering the deadline is just two weeks away.

Republican House Speaker John Boehner ceded ground, edging
closer to President Obama’s key demands, including tax raises for the highest
earners. He maintained that Obama would have to cut social spending, but the
sign of movement was enough to reinforce the underlying optimism that has seen
the dollar weaken against the majority of its peers.

Without any drastic changes in confidence, the trends
suggest that the greenback will continue to weaken as we edge towards a deal.
If however, any announcement casts doubt on the US’ ability to conclude a deal
before 1^st January, we may see the dollar gain strength on the
uncertainty.

Over the weekend, Japan’s elections finished in an
unsurprising win for the Liberal Democratic Party. Comprehensive victor, Shinzo
Abe, has been aggressively pushing for unlimited easing and a readjustment of
the nation’s inflation target in order to reinvigorate Japan’s protracted
slump. The prediction that Abe’s party would emerge victorious has seen the yen
weaken nearly five percent in recent months, reaching 18-month lows against
sterling.

 

Today’s Key
Announcements:

• 10.00am – EUR – Trade Balance
• 13.30pm – USD – Empire State Manufacturing Index: expected
  at -0.7
• 14.30pm – EUR – ECB President Draghi Speaks