President Barack Obama and congressional Republicans are struggling to come up with a deal to avoid early 2013 tax hikes and spending cuts that many economists say could send the U.S. economy into recession.
President Obama did try to calm down the pressure and said that he remains optimistic that the two sides can come together in the essence of compromise and he is hopeful a deal can be finalized before Christmas. This comment by the President did little to the market which closes at session low.
In the morning today, the Asian markets are mainly down following the US failure in the negotiations between the two houses in Congress.
The Japanese Nikkei closes 1.19% down despite the Bank of Japan enouncement regarding an additional stimulus, a third stimulus plan in four months on Thursday. He also let the foundations to more aggressive action next year, as it faces intensifying pressure from the country's next leader for stronger efforts to beat deflation.
Out of Europe today, Switzerland’s trade balance rose unexpectedly last month, official data showed on Thursday. In a report, Swiss Trade Balance rose to a seasonally adjusted 2.946B, from 2.732B in the preceding month whose figure was revised down from 2.821B. Analysts had expected Swiss Trade Balance to fall to 2.250B last month.
Germany’s import price index rose more-than-expected in the last quarter, official data showed on Thursday. The report showed that German Import Price Index rose to a seasonally adjusted 0.0%, from -0.6% in the preceding quarter. Analysts had expected German Import Price Index to rise to -0.3% in the last quarter.
With only a few days before Christmas and 10 day before the end of the year, all eyes will continue to focus on the Fiscal cliff negotiations. All other data as important as may be will be put aside as the fiscal cliff holds too much at stake.
EUR/USD The boost in risk appetite sent the euro to an eight month high yesterday due to an improvement in market sentiment following positive comments both from the US and from Europe. At the moment, the rally was capped by the 1.3300 level in the overnight trade, the Euro weakened against the Dollar on rising concerns that a deal will not be reached to avoid the fiscal cliff.
Technical analysis has little change in this case here as the rally in the Euro depends slowly on the fiscal cliffs talks. If positive news continues to come out of Washington regarding the fiscal cliff, the rally in the markets and in the Euro will continue.