Fiscal Cliff Waiting Game Continues

15.13 AEDT, Monday 17 December 2012

Fiscal Cliff Waiting Game Continues
By Tim Waterer (Senior Trader, CMC Markets)

Investors continue to grow more cautious by the day as the waiting game continues to see which political party will ‘blink’ first in Washington. In the meantime, the as-yet unresolved fiscal cliff will impose a dampening effect on any market reaction to positive economic indicators. US GDP, Building Permits and the Philly Fed Manufacturing Index will all be closely watched economic events this week, however all will take a back seat to the Budget talks.

The lack of new sentiment drivers was evident in the currency market during Asian trading hours, with the AUD slipping below 1.0550 on thin volumes. The AUD followed a dip lower in the gold price today, and with traders starting the week generally in a cautious frame of mind the Aussie faced a gentle price slide today. However, overall the AUD remains well supported, and while the currency did lose some ground against the greenback today, it did leap higher against the Yen following the Japanese election result, which will likely lead to more monetary easing in Japan.

The blue chip miners on the Australian sharemarket continued their rich vein of form with BHP and RIO both advancing higher. Elsewhere it was a different story with the financial sector finding the going much tougher to start the week. Overall, it was a rather nondescript performance by the Australian bourse with any distinct market direction proving to be elusive in light of the ongoing US fiscal cliff talks.

We likely won’t see trading activity of any conviction until a favourable outcome on the ‘cliff’ is achieved. In the meantime traders will remain on high alert for any news of a compromise from Capitol Hill.

Web: http://www.cmcmarkets.com/

ENDS

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