“Fiscal Cliff “ Canceled - 2.1.2013
The New Year was started with good news for the markets - on Tuesday both Congress Houses have passed the bill that allowed the USA to avoid the "fiscal cliff". We remind that the budget issue in the US remained one of the most discussed topics of the last month, because it could lead to the world's largest economy recession, according to pessimistic forecasts. The passed bill provides the tax increase for those with high-income (over 450 000 per year) and social benefits reduction, but it allowed to avoid an automatic tax increase for the vast majority of Americans.
Market reaction was not long in coming. There was an increase in all major regional stock indices observed during Asian trading session. Risk-sensitive currencies gotten under pressure in recent weeks, strengthened sharply vs. the US dollar this morning. The Australian dollar is trading above 1.0460, compared to the 2012 closing at 1.0367. As for Canadian currency, the US dollar fell below 0.9880 against it, compared to closing at 0.9963 in December.
There was an increase in European currencies also observed in the morning. Euro approached 9-month high at 1.3307 made in December, while the British pound reached its highest level since August 2011 at 1.6338. In addition the statistics on activity in the manufacturing sector of Germany and the UK for December - (PMI Manufacturing), and the CPI dynamics - (German CPI) will be published today. Later in the evening the data on the manufacturing industry in the US (ISM Manufacturing) is also expected.