US Are One Step Away From Automatic Spending Cut | IFCM India
IFC Markets Online CFD Broker

US Are One Step Away From Automatic Spending Cut - 1.3.2013

Euro once again came close to 1.30 against the US dollar. It was trading a narrow range 1.3056-1.3082 during the Asian trading session, compared with yesterday peak at 1.3160. The downfall in euro was occured, in particular, due to falling inflation in the Eurozone. The index, excluding fuel and food prices, rose in January only by 1.3% (previously: 1.5%), giving the ECB some more room to maneuver in case the regulator goes for further easing of monetary policy. As a result, EURUSD froze over the key support area at this stage within 1.3000-1.3050, overcoming this area can open the way to 1.27. The demand for risk sensitive assets was undermined this morning after the data from China, where the official PMI reading showed that the growth in the industry in February was the lowest in the last 4 months. The index fell to 50.1, below market forecasts. During the Asian trading session the January's CPI reading in Japan was also interesting. The index fell by 0.3% in annual terms. We recall that, the Bank of Japan raised its inflation target in January up to 2%, while Haruhiko Kuroda being an active monetary stimulus supporter, was nominated yesterday as the head of the Bank of Japan. In this regard, we look forward to the first statements of the new bank chairman after his approval by the Parliament, which may trigger a new wave of yen selling. At present, the USDJPY currency pair is traded around 92.50. The most significant risk factor for the markets are the impending automatic budget cuts in the US in the amount of 85 billion dollars that could undermine growth opportunities not only in the U.S. but also in its trading partners. The IMF said on Thursday that it will reduce economic growth forecasts in the U.S., at least, by 0.5%, if the spending cuts do take place. Automatic spending cuts known as "sequestration" will become a reality today until midnight, if the White House fails to reach an agreement with the Republicans. Risk sensitive Canadian dollar has been under heavy pressure against the US dollar. The USDCAD currency pair rose to a new eight month high at 1.0311 due to the approaching threat of automatic spending cuts in the U.S. that will affect Canadian economy. In this regard, today, the Canadian GDP data can be important for the loonie. The data are expected to be published in the late afternoon.
IFCM Trading Academy - New era in Forex education
Pass Your Course:
  • Get Certificate
trading academy

See Also

image
Follow the Market with Our Live Tools and Calendars
Close support
Call to Skype Call to WhatsApp Call to telegram Call Back Call to messenger