BOSSA.CZ (BOSSA.CZ)
Currencies  |  December 10, 2012 11:55:48

Early commentary on the currency pair EUR / USD and economic events in Europe and the U.S.


Fight for the American budget continues

The U.S. Congress is still unable to agree on terms of the budget for 2013. Disagreements are the result of different policies of the two largest parties in the USA. Democrats insist on tax increases and Republicans require systematic cuts, especially in the area of ??mandatory spending. The overall shape of the budget is not yet in sight.
And so the realization of fiscal cliff becomes more and more realistic, and with it the predictions of what would happen if political representation truly the end of this year to result in a consensus. Ben Bernanke (Federal Reserve Chairman) sees it as a disaster for the American economy.On Wednesday, the Fed meeting will therefore be closely watched. Chief Economist Chad Stone Budget Committee declared that unless the politicians on fiscal cliff to the end of December, the fall of the U.S. economy will be inevitable and abrupt.
According to his words, the Congress itself created problems when allied negotiations on tax increases and expenditure cuts in a single package. Artificially created term fiscal cliff that currently haunts all legislators and investors.

Interrupted negotiations
Negotiations are stuck with uncompromising Democrats, led by President Barack Obama, who insists on increasing tax rate for Americans earning the most, from 35 percent to 39.6 percent. Although some Republicans on their demands slowly permit, the deal is not yet in sight.So far, the markets did not show any sign of panic, but their patience can expire when the lawmakers by the end of this week moves through not in further negotiations.
Budget Committee of the U.S. Congress estimated that the United States find themselves at the beginning of the recession, if not a compromise and consensus in terms of fiscal cliff. The unemployment rate could thus stoupnoutaž to 9.1 percent.

Financial markets
Traders in financial markets remain optimistic about finding a compromise.
Some economists have begun to use instead the term fiscal cliff, better fiscal slope. Concerns of some skeptics are apparently exaggerated and even if a compromise is not agreed by the end of the year, it would not become nothing major.
However, very sensitive to the negotiations in Congress are responding U.S. stocks that are above average callable when announcing news from Congress. In case an agreement can be strong strengthening of shares together with the U.S. dollar.
For example, the S & P 500 on the 29th three minutes during November fell by 0.5 percent, while Republicans boss said he does not see the path to compromise.

Europe

Italy
Italian Prime Minister Mario Monti said on Saturday that the resignation shall, once approved budget for next year. He decided so after party on Thursday, former Prime Minister Silvio Berlusconi announced that he had withdrawn his support for the current "government university professors." Prime Minister leaves So when Berlusconi announced that he plans to return to the political scene and stand in elections next year.After the country's Monti pushed through a series of painful austerity measures, now wants to use Berlsuconi discontented Italians to his re-election.
Mario Monti deliberately waited with her statements at the weekend, when financial markets are closed in order to have enough time to absorb this information and did not cause unnecessarily exaggerated price swings.
Parliament could therefore be dissolved by the end of this year and elections could be held on the 10th probably February.
Mario Monti has not yet ruled, if the coming elections.

Greece
Athens extended the deadline by which those interested can buy the Greek government bond log, until Tuesday, the 11th December 1 p.m. CET. The Hellenic Republic is planning to purchase securities with a nominal value of 30 billion euros in about one-third the price.According to local sources the Greeks has received offers for the purchase of bonds in the amount of 26 to 27 billion euros. Athens assume that the extension of the deadline could lead to an increase in demand and achieve the aforementioned objectives 30 billion.
Repurchase program of Greek government bonds may attend private creditors who own bonds totaling some € 63 billion (about 1.6 trillion CZK). Of that Greek banks are estimated to account for roughly 17 billion euros.
Athens on average repurchase bonds at a price equal to approximately one-third of their nominal value. So to redeem bonds worth 30 billion euros used only about 10 billion euros. But also I had to borrow. The main source of funding for Greece since 2010 (when Greece first applied for assistance) so-called "troika" and the Greek banks.
Total debt of Greece would be in the finals was reduced by about 20 billion euros.

Eurodollars entered into a new week and opened a big gape at the price 1.2888. Thus fell back to fibonacci level 50, where currently consolidates. On an hourly chart, you can see the place where the supply and demand dragging the prize. Range between 1.2973 and 1.2948, we broke through almost 14 hours. Similar price boundaries are also currently in a range between 1.2913 and 1.2893. On the chart we see that the Eurodollar got into a declining trend and so in today's trading intradenním be safer to focus on short positions. Entrance to the store I was looking at the Fibonacci levels punctured 50th
I would like to point out also not a situation where the price is usually trying to fill the gap and thus possible short of moving up.

The U.S. dollar index chart, we see a gradual strengthening. On Friday, reaching the American dollar against other currencies 12denního its maximum. We finally Friday session closed at 66.64. The market has bounced twice from the growth trend line and the oscillator is created hidden bullish divergence, which suggests that the market may continue to strengthen. Despite all these technical signals you need to be attentive to the underlying messages of Congress.

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