Intraday Market Thoughts

Fiscal Cliff Averted?

by Adam Button
Nov 28, 2012 23:51

Markets reversed Wednesday on signs that US politicians are working towards a deal on the fiscal cliff. The commodity currencies led the way while the pound lagged. Australian capex data will be a key factor in the December RBA decision. Will last nights new set of Premium Insights on GBPUSD prove to be on the money as were the prior 2 weeks? And why did we change the strategy in EURUSD? The latest edition also has 3 charts on EUR & Equity volatility. See more below in the bottom paragraph.

Market sentiment eroded early in US trading, sending the euro as low as 1.2879. The declines culminated with the release of October US home sales, which slowed to 386K compared to 390K expected.

USD/JPY stumbled to 81.69 and the commodity currencies were under pressure. Shortly afterward the tide turned as Republican House leader Boehner said he was willing to consider addition revenues (taxes on high earners) if accompanied by spending cuts. Later, Obama said he believes a deal could be reached before Christmas.

A final deal is still a long ways away but the positive tone encouraged risk trades. The S&P 500 closed 10 points higher after falling by 10 early in the session. The euro bounded to 1.2960 and USD/JPY to 82.08.

Later in the day, the Fed

s November Beige Book showed that manufacturing was softening but consumer spending was upbeat. The tepid tone from the Fed suggests that another QE program will be unveiled when Operation Twist expires at year end.

In Asia-Pacific trading, the highlight will be on third quarter private capital expenditure data from Australia. Expectations are for a 2% increase and there is considerable talk the indications on investment spending could swing the RBA toward holding rates or a cut.

2 new trades on EURUSD, GBPUSD, 1 on USDJPY, 2 on EURJPY, 1 on AUDUSD, 1 on Gold and one existing, 2 new on silver and 2 existing in US crude oil. For DIRECT ACCESS to these trades and the relevant charts, click here: NonSubscribers Can click here to join:



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