US Dollar Rose On The Lack Of Budgetary Decision | IFCM UAE
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US Dollar Rose On The Lack Of Budgetary Decision - 24.12.2012

Yen keeps being trading near 20-months low vs. U.S. dollar on Monday. Shinzo Abe, the head of the Liberal Democratic Party that has won the parliamentary elections and the future prime minister, has stated once again about the necessity of raising the inflation target up to 2%. To achieve these goals, Abe is ready to go for the law revision that guarantees the Central Bank independence. The USDJPY currency pair was traded in the range 84.31-84.48. The 20-months high for the pair set last week is at 84.60. The US dollar strengthened on Friday after falling to a 2-month low and now it is trading relatively stable vs. the most liquid currencies. The key driver for markets is the discussion concerning the budgetary issues in the USA. Worries are related to the fact that if the government can not come to an agreement and the Congress does not approve a series of measures aimed at budget balancing before January 1, Americans will receive automatic sharp tax increases and cuts in social benefits that is threatening to return the economy into recession according to some pessimistic forecasts. We recall that the "Plan B" by John Boehner, designed to avoid the "fiscal cliff" was failed last week not being supported even within the party. As a result, investor’s sentiment has been dramatically changed, and we observed a significant increase of the US dollar value at the end of last week. Euro fell and remained below 1.32, although there were attempts to test 1.33 just a few days ago. Australian dollar hit a 4-week low at 1.0384 this morning. US dollar vs. Canadian currency managed to grow up to a 3-week high at 0.9951 on Friday. With the upcoming holidays and the lack of important macroeconomic data the “fiscal issue” will be a key factor in the market movement.
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