Currencies  |  December 05, 2012 11:46:39

EUR / USD Morning comment

Fiscal reef

Barack Obama said last night that it will not conclude any agreement on the fiscal cliff, until Congress does not accept tax increases. President Barack Obama remains very uncompromising in his attitudes, mainly due to the intoxicating feeling of re-election.
Tax increases and humiliation of the budget expenditure must be agreed by the end of December. Measures should take effect in January, so the politicians to compromise much time left.Fiscal reef is a threat that could strongly affect the U.S. economy and knock it back into recession. Obama can become president, which sends USA back in 2009 or president who starts a new decade.
Obama insists on raising taxes for individuals with incomes above $ 200 000 a year and for married couples with income exceeding $ 250,000 per year. Republicans oppose raising taxes on income and add that any tax increase will never not start the economy. However, it is very likely that Republicans ultimately voted for tax increases in exchange for major spending cuts.
Obama also very clearly stated that he wants to increase the budget limit and will report to the Republicans one next week. United States this year will reach a debt ceiling of $ 16.4 trillion. The U.S. would thus raiser debt ceiling several times already.Governance for Barack Obama would be already the second increase.


At Tuesday's meeting of EU finance ministers, it was mainly the ECB and its new powers. Germany and France, before the great allies, they found common ground in negotiations on the ECB as a supervisor of the banking sector
"Time is running out and the need to find common ground and complete the legislative process for banking in the EU" said German Finance Minister Wolfgang Schaeuble, while admitting that Germany will not support plans that puts ECB in a position supervisor.
French Finance Minister Pierre Moscovici, together with the ECB protesting dismissive views of Berlin. The only right way, according to France's central banking and unification steps in this sector. Just as Paris can build the banking sector back on its feet.
The ministers will continue discussions on the 12th December and 13 December at the summit of European leaders.

Today we will have a lot of interesting news from both economies. One of them is 10-year Spanish bond auction. Spain would like to met with the same shopping fever on Monday as Greece. In the morning, the results will be released Purchasing Managers' Index of euro zone services sector and Great Britain. The euro area should remain in the estimated contraction in this sector.
In the U.S. today, we must be careful to "ADP national employment report." Later, the Agency shall Markit's ISM non-manufacturing sector.
Eurodollars yesterday closed above the falling trend line connecting the peaks in May and August 2011.

This morning, rising up to the previous peaks at 1.3125 and broke the 6-week highs. You could technically get a bit under pressure. Zone between 1.3120 and 1.3160 ??is critical for the further strengthening of the euro. Increase over the last few days was very steep, and it is possible that the euro a little off because before will continue to grow. In strengthening helps him mainly aforementioned debate on fiscal cliff in the USA.
Minor correction euro could move back somewhere to 1.3075 and then to build on strengthening. On the chart we see divergence on MACD and RSI, which could mean a smaller decline.

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