Daily market report 20/12/2012

Currency
markets continue to be dominated by the ongoing Fiscal Cliff negotiations
between President Obama and Republican House Speaker John Boehner.

Yesterday
morning, due to optimism that a deal could be reached, we saw the US Dollar
weaken against the majority of its counterparts, with Sterling rallying towards
the previous yearly highs set in April and September. However as the day progressed
and going into yesterday evening, we saw the US Dollar regain some of its
losses over doubts that a deal could be reached before the year end after a
spokesman from the White House said that they would veto the tax and spending
proposals made by John Boehner.

The Euro gained
support yesterday due to investor’s appetite for risk as well as encouraging
data from Germany, causing the single region currency to print a two monthly high
against the Pound.

Producer
Price Index released from Germany this morning have come in as expected at 1.4%
and UK Retail Sales figures released this morning have fallen below the
expected 1.5% coming in at 0.9% year on year, disappointing the markets and
causing immediate pressure on the Pound.

As stated
above, currency markets and investor appetite for risk will continue to be
dominated by Fiscal Cliff negotiations and given the moves we saw yesterday,
especially in the Sterling/US Dollar, acting quickly or leaving orders with our
dealers will allow you to get the most of the current market conditions.

Key Announcements Today:

13.30pm – USD – GDP: expected to
marginally increase to 2.8%

13.30pm – USD – Personal
Consumption Expenditures Prices: expected at 1.6%

13.30pm – USD – Core Personal
Consumption Expenditures: expected at 1.1%

15.00pm – EUR – Consumer Confidence:
expected to marginally increase to -26.85

15.00pm – USD – Existing Home
Sales Change: expected to decrease to 1.3%

15.00pm – USD – Philadelphia Fed Manufacturing
Survey: expected to increase -3