Fiscal cliff looms on the horizon

We had another busy week last week with the money markets range trading on the back of data with the US Presidential Election providing an early sigh of relief on Wednesday morning, pushed GB Pound/US Dollar above 1.60, euro/US Dollar 1.28 and GB Pound/euro by 1.25.Fiscal cliff looms on the horizonHowever, moving into this week we have seen the US Dollar strengthen against GB Pound and the euro, pushing the rates below 1.59 and 1.28 respectively.

The USA is closed today with it being Veterans Day Holiday so I would imagine trading will remain subdued, however with the US Fiscal Cliff fast approaching we are seeing risk off in the markets as the, so-called, Safe Have US Dollar gains.

We have a busy week with US Data this week with Key US Retail Sales and FOMC Minutes on Wednesday, Thursday we have US CPI, initial and Continuing Jobless Claims with Ben Bernanke speaking to finish off the day.

It finally appears that Greek Austerity bill/budget cuts have been approved by Greek parliament after much speculation that it would be voted out with increasing numbers of labour reforms.

Unfortunately the reforms will have to pass through Brussels today and the Bundestag (German Lower house of Parliament) to sign off on the austerity package, which includes prolonging further cuts until 2016.

This week we have French, Spanish and Italian inflation figures, French, Spanish, German and Italian retails figures and Eurozone CPI and GDP and German ZEW Economic Sentiment.

After interest rates and policy easing was left on hold on Thursday we have seen it struggle against US Dollar and teh euro.

This week should be interesting with UK CPI and Mervyn King’s inflation report on Tuesday and Wednesday to finish on Thursday with UK retail figures to see if they are as attractive as last month’s shock 1% rise.

Leave a Reply