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Forex Analysis: US Dollar May Rise with "Fiscal Cliff" Woes in Focus
The US Dollar may rise on haven demand amid fears that a deal to avoid the “fiscal cliff” remains elusive as US President Obama pitches his proposal.
Talking Points
Dollar May Rise on “Fiscal Cliff” Deadlock Fears as Obama Speaks in Detroit
Yen Gains on Haven Flows as Japanese GDP, Chinese Export Data Disappoint
Euro Underperforms After Italian PM Monti Pledges to Resign Over the Weekend
The economic calendar is quiet through the remainder of the trading day, putting the spotlight on US President Obama as he delivers a speech in Detroit to promote his plan to avoid the “fiscal cliff”, a set of spending cuts and tax hikes due to trigger at the turn of the calendar year. The Congressional Budget Office (CBO) estimates the burst of austerity – if left to trigger as scheduled – is likely to tip the US back into recession in the first six months of 2013. Republicans and Democrats have been at loggerheads on a compromise plan to avoid the “cliff” and more of the same is likely to weigh on risk appetite, boosting haven demand for the US Dollar. Obama’s plan features $1.6 trillion in tax increases and $600 billion in spending cuts.
The Japanese Yen advanced in overnight trade on the back of safe-haven demand as the final revision of third-quarter Gross Domestic Product data showed the economy shrank -0.9 percent compared with 0.8 percent expected. A worrisome set of Chinese trade figures reinforced regional growth concerns, showing exports added a meager 2.9 percent year-on-year in November. This marked the lowest reading in three months and a sharp deviation from forecasts calling for a 9.0 percent increase. The Euro underperformed after Italian Prime Minister Mario Monti announced he would resign after the 2013 budget is passed this month, feeding uncertainty about future policy in the largest of the so-called “PIIGS” countries.
Asia Session: What Happened
GMT | CCY | EVENT | ACT | EXP | PREV |
1:30 | CNY | Consumer Price Index (YoY) (NOV) | 2.0% | 2.1% | 1.7% |
1:30 | CNY | Producer Price Index (YoY) (NOV) | -2.2% | -2.0% | -2.8% |
5:30 | CNY | Industrial Production (YoY) (NOV) | 10.1% | 9.8% | 9.6% |
5:30 | CNY | Industrial Production YTD (YoY) (NOV) | 10.0% | 10.0% | 10.0% |
5:30 | CNY | Fixed Assets Inv Excl. Rural YTD (YoY) (NOV) | 20.7% | 20.9% | 20.7% |
5:30 | CNY | Retail Sales (YoY) (NOV) | 14.9% | 14.6% | 14.5% |
5:30 | CNY | Retail Sales YTD (YoY) (NOV) | 14.2% | 14.1% | 14.1% |
21:45 | NZD | Manufacturing Activity (3Q) | 1.6% | - | -0.8% (R+) |
23:50 | JPY | BSI Large All Industry (QoQ) (4Q) | -5.5 | - | 2.2 |
23:50 | JPY | BSI Large Manufacturing (QoQ) (4Q) | -10.3 | - | 2.5 |
23:50 | JPY | Nominal GDP (QoQ) (3Q F) | -0.9% | -0.9% | -0.9% |
23:50 | JPY | GDP (QoQ) (3Q F) | -0.9% | -0.8% | -0.9% |
23:50 | JPY | GDP (Annualized) (3Q F) | -3.5% | -3.3% | -3.5% |
23:50 | JPY | GDP Deflator (YoY) (3Q F) | -0.8% | -0.7% | -0.7% |
23:50 | JPY | Current Account Total (¥) (OCT) | 376.9B | 230.9B | 503.6B |
23:50 | JPY | Adjusted Current Account Total (¥) (OCT) | 414.1B | 247.0B | -142.0B |
23:50 | JPY | Current Account Balance (YoY) (OCT) | -29.4% | -59.0% | -68.7% |
23:50 | JPY | Trade Balance - BOP Basis (¥) (OCT) | -450.3B | -450.0B | -471.3B |
23:50 | JPY | Bank Lending Banks ex-Trust (NOV) | 1.3% | - | 1.1% |
23:50 | JPY | Bank Lending incl Trusts (YoY) (NOV) | 1.0% | - | 0.8% |
0:01 | GBP | Lloyds Employment Confidence (NOV) | -42 | - | -35 |
0:30 | AUD | Home Loans (OCT) | 0.1% | 3.0% | 1.1% (R+) |
0:30 | AUD | Investment Lending (OCT) | 5.5% | - | 8.8% (R+) |
0:30 | AUD | Value of Loans (MoM) (OCT) | -0.2 | - | 1.4% (R-) |
2:13 | CNY | Trade Balance ($) (NOV) | 19.63B | 26.85B | 31.99B (R+) |
2:13 | CNY | Exports (YoY) (NOV) | 2.9% | 9.0% | 11.6% |
2:13 | CNY | Imports (YoY) (NOV) | 0.0% | 2.0% | 2.4% |
4:30 | JPY | Bankruptcies (YoY) (NOV) | -12.0% | - | 6.0% |
5:00 | JPY | Consumer Confidence (NOV) | 39.4 | - | 39.7 |
6:00 | JPY | Eco Watchers Survey: Outlook (NOV) | 41.9 | - | 41.7 |
6:00 | JPY | Eco Watchers Survey: Current (NOV) | 40.0 | - | 39.0 |
Euro Session: What to Expect
GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
7:00 | EUR | German Imports s.a. (MoM) (OCT) | 0.4% (A) | -1.6% | Low |
7:00 | EUR | German Exports s.a. (MoM) (OCT) | -0.3% (A) | -2.4% | Low |
7:00 | EUR | German Trade Balance (€) (OCT) | 15.5B (A) | 16.9B | Medium |
7:00 | EUR | German Current Account (€) (OCT) | 13.5B (A) | 16.3B | Medium |
9:30 | EUR | Euro-zone Sentix Investor Confidence (DEC) | -16.9 | -18.8 | Low |
10:00 | EUR | Italian GDP s.a. and w.d.a. (QoQ) (3Q F) | -0.2% | -0.2% | Low |
10:00 | EUR | Italian GDP s.a. and w.d.a. (YoY) (3Q F) | -2.4% | -2.4% | Low |
Critical Levels
CCY | SUPPORT | RESISTANCE |
EURUSD | 1.2830 | 1.2975 |
GBPUSD | 1.5976 | 1.6092 |
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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