Investors remained concerned over the looming “fiscal cliff” in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January first.
These automatic cuts might lead the US economy to fall back into a recession, unless the divided Congress and the White House can work out a compromise before then.
On the other side of the Atlantic, concerns over Greece’s fiscal condition intensify after a meeting of euro zone finance ministers earlier in the week ended without any final decision on whether to release an urgently needed EUR31.5 billion bailout installment for the debt-strapped country.
The decision instead has been postponed until November 20th, as the International Monetary Fund and European officials were unable to reach an agreement on how best to reduce Greece’s debt to manageable levels.
In the Asian session today, the market rose, but gains were capped amid growing uncertainty surrounding Greece’s and the US.
Investors also eyed the conclusion of the Chinese Communist Party Congress later in the day, where a once-in-a-decade leadership change is to take place.
Moving back to Europe, In a report that came out today, Spanish industrial new orders fell more-than-expected last month, official data showed on Wednesday.
The report shows that Spanish Industrial New Orders fell to a seasonally adjusted -5.7%, from 1.7% in the preceding month whose figure was revised up from 1.0%.
France inflation numbers also came out today showing that the CPI rose 2.1% on a yearly basis during October, in line with consensus, and 0.2% MoM vs. +0.3% estimated.
Later in the day Portugal GDP numbers and Italian 10 year bond auction will take a center stage. Just to be replaced soon after by the US inflation and Retail sales report.
Asset In Focus:
USD/JPY The Japanese yen is down to a four day low against the U.S. dollar today, as uncertainty over Japans elections weighed on demand for the nation's currency, while concerns over the handling of Greece's financial troubles supported the safe haven dollar.
The yen came under pressure after Japanese Prime Minister Yoshihiko Noda earlier said he could dissolve the lower house of the parliament on November 16, which suggests that an election may be held next month.
Resistance: 79.80, 80.33
Support: 79.55, 79.22