A fiscal cliff deal,
the present that America wants so desperately for Christmas

As we edge towards Christmas, we are edging towards a fiscal
cliff deal. President Obama and Republican House Speaker John Boehner have been
going back and forth trying to negotiate terms that appease their respective
parties and it looks like finally, in time for Christmas, the discussions will
reach a conclusion.

A fiscal cliff deal,
the present that America wants so desperately for Christmas

As we edge towards Christmas, we are edging towards a fiscal
cliff deal. President Obama and Republican House Speaker John Boehner have been
going back and forth trying to negotiate terms that appease their respective
parties and it looks like finally, in time for Christmas, the discussions will
reach a conclusion.

Raising taxes is seen as a necessity for the States, but at
what income levels they are ameliorated is causing great debate. Obama is
pressing for households earning more than $250,000 to be taxed at a higher
rate, whilst Boehner wants earnings only above $1,000,000 to be levied with a
new rate.

Despite the disparity between the two figures, investors are
confident that a compromise for the deal will be found. Resultantly the dollar
has tumbled against the majority of its peers, sitting very close to a one-year
low against sterling and a seven-month low against the euro, representing a
great time to buy dollars.

The festive season seems to be having positive effects on
other regions too. Greece has very generously been given a ratings upgrade;
Standard & Poors lifted the nation from Selective Default to B-, citing
strong determination of euro area governments to keep the currency region
together.

Good German business climate data has also been released
this morning, further adding to strength against almost all of its
counterparts. The pound is the sole currency outperforming the euro, buoyed by
the 2.7% inflation rate yesterday, the figure suggesting that further
quantitative easing will not be required just yet.

 

Key Announcements
Today:

• 09.00am – EUR – German Ifo Business Climate: up at 102.4,
  expected at 101.9
• 09.00am – EUR – Current Account: returned at 3.9B
• 09.30am – GBP – MPC Meeting Minutes
• 11.00am – GBP – CBI Realised Sales
• 13.30pm – USD – Building Permits: expected to marginally
  increase to 0.88M
• 13.30pm – USD – Housing Starts: expected at 0.87M