Hopes of a congress
deal weakens the dollar

Still supported by the confidence in congress’ ability to
find a solution to the US fiscal cliff, the dollar has been gradually
weakening, as risk sentiment switches on.

Despite only intimations from insider parties, people are
willing to believe that progress is being made, even though little discernible
strategy has been publicly released.

Hopes of a congress
deal weakens the dollar

Still supported by the confidence in congress’ ability to
find a solution to the US fiscal cliff, the dollar has been gradually
weakening, as risk sentiment switches on.

Despite only intimations from insider parties, people are
willing to believe that progress is being made, even though little discernible
strategy has been publicly released.

Numerous senior congressional members have spoken in the
last week about their optimism that a deal can be thrashed out, this has seen
investors take a similar optimistic stance as they search for greater returns
in riskier currencies.

President Obama hopes that a deal could be conjured before
Christmas, this still leaves plenty of time for fluctuating crises in
confidence, however if correct, we could see protracted dollar weakness.

Once the impending $607bn planned austerity has been
sidestepped, we may see investors take a step back, and once again assess the
difficulties that face the global economy. For now though as long as confidence
persists, the trend could be a deteriorating dollar against its risker
counterparts.

Key Announcements
Today:

• 07.00am – German Retail Sales m/m: heavily down at -2.8%
• 07.45am – French Consumer Spending m/m: slightly down at
  -0.2%
• 08.00am – EUR – ECB President Draghi Speaks
• 10.00am – EUR – CPI Flash Estimate y/y: expected at 2.4%
• 10.00am – EUR – Unemployment Rate: expected to slight
  increase to 11.7%
• 13.30pm – USD – Personal Spending m/m: expected to fall to
  0.1%
• 14.45pm – USD – Chicago PMI: expected to improve to 50.7