EUR/usd
Doctor House was right – everybody lies. This time those, who believed that it would be easy to agree on the fiscal cliff issue, proved to be mistaken. The good beginning of trades in stock exchanges on China's agitation was ruined by poor news from the USA. The republicans refuse to support tax increases. They stick to the idea of further active economic stimulation, while Obama advocates spending cuts. We still believe that the middle way here consists in tax increases for the rich and preservation of some tax benefits. Yet republicans want deeper spending cuts on health care than Obama (600bln per a decade against 350bln). This bitter disagreement stroke a blow against the US stock exchanges yesterday. As a result, S&P 500 dropped by 1.5% from the daily high. But let's look at the bright side: now we know the views of both the parties (democrats and republicans), so it'll be easier to track how the negotiations progress. Market observers have high expectations of this week, though it can well be the case that the situation will be getting tenser and tenser nearer to Christmas. It's remarkable that selling of the US stocks didn't turn into a reversal in the currency market. The euro stopped growing and since yesterday's US session has been hovering around 1.3050. It's also worth mentioning that the daily high of Monday makes 1.3075. Thus, the market is still ready to jump up. The only thing needed for that is good news. Today the comments of EU finance ministers may serve the purpose. It will be interesting to see how well the EU politicians have learnt to negotiate.
GBP/USD
The British pound felt much better than the euro yesterday afternoon. The currency even tried to get above 1.61 against the dollar. And this is the monthly low. If the markets remain positive today and tomorrow, there is every chance that the pound will test 1.6275 – the level of fierce struggle on the bears' side. Yesterday's Manufacturing PMI stats were quite favourable, with PMI now being at 49.1 against 47.3 a month ago. Construction PMI will be in the limelight today and Services PMI– tomorrow. But it's all just a prelude, since tomorrow traders' attention will be riveted to the draft budget for the coming year, and on Thursday – to the BOE's decision on the rate and QE.
AUD/USD
The RBA took a decision to cut the rate by 25bp. That news was taken into account by the markets, moreover some traders positioned for the possible further rate cuts and even staked that the rate could be cut right by 50bp. This didn't happen, on the contrary we could observe some improvement in certain indicators and also hopes for the broader effect of the previous easing in the coming months. Against such a background the aussie is growing, albeit rather slowly, by 30 pips. Yet, it is not a frequent case when the currency grows on monetary policy easing.
gold
In the meantime, Gold quite unexpectedly is depreciating. It's a really surprising thing at the time when the markets are on the decline due to serious concerns around the fiscal cliff (a bit more than a year ago Gold was very popular and high in price). This year Gold apparently won't be able to get above its global highs ($1900), though there is some hope that the price of the metal will remain above the yearly open, i.e. above $1569.
