The fiscal cliff remains the main focus for traders today. Market participants are watching tentatively for any development as the January 1st deadline looms ever closer. Sentiment had been relatively positive over the last week or so, as reaching an agreement before the deadline looked more than plausible. However a Citigroup survey has found that investors are now evenly split on whether an agreement on tax rises and spending cuts will actually be reached by congress. This increasing level of doubt was conveyed through the US stock markets yesterday as indexes closed down for the day.
It would appear that President Obama and House Speaker John Boehner are not at loggerheads just yet, but it is becoming increasingly apparent they are reaching an impasse. Mr Boehner has accused the President of not being serious about cutting spending, however the President has compromised on tax revenues, now demanding $1.4 trillion, down from $1.6 trillion. With just over two weeks until the deadline is reached, it is not yet apparent whether both sides are simply setting out their positions to see exactly how far they can press the other side or whether their truly is a legitimate stalemate.
Markets are relatively flat this morning, though we may well see movement in the Euro on the back of PMI figures that have just been released. Markit Manufacturing PMI is down across Europe with the EU and Germany both recording a figure of 46.3. However, Germany and the EU both reported positive Markit Services PMI figures of 52.1 and 47.8 respectively.
US Consumer Price Index and US PMI figures are due out this afternoon at 13:30 and 13:58 GMT. These results are expected to be slightly down on last month’s, any improvement on these expectations could bring about some movement in the Dollar, however any significant move is going to be dependent on the fiscal cliff progress.