A sideways trend persists for the US dollar-Swiss franc currency pair. So are the anxieties over the looming fiscal cliff, which could turn into a fiscal disaster for the world’s largest economy if a budget deal cannot be agreed upon before the dreaded deadline. But with US lawmakers seemingly unable to come into an agreement, market participants are turning jittery, which could lead to selloffs of the Greenback and purchases of the Swissie.
Most markets are trading on thin volume today, which is not a big surprise during the holidays. But with less than a week left before the United States goes over the fiscal cliff, investors are seen limiting their risk exposure and are likely to bank on safer assets.
Anxieties over what is believed to be a failed grand bargain affect the demand for the riskier single currency. US lawmakers remain deadlocked on a deal to avert the so-called fiscal cliff, a week before the dreaded deadline. It has been reported that President Barack Obama plans to leave his Hawaii vacation December 26 and return to Washington on December 27, the same day that Congress returns to continue negotiations on averting the fiscal cliff.
Though there is still a chance for a deal, it grows more unlikely by the day, and there are not many days left, says Ron Bonjean, a Republican strategist who formerly served as a spokesman for House Speaker Dennis Hastert and Senate Majority Leader Trent Lott.
A report by Cotten Timberlake of Bloomberg states that Americans have become warier as Washington approaches the end of the year without an agreement to forestall higher taxes and automatic spending cuts. Last month, retailers from Macy’s Inc. to Target Corp. posted same-store sales that trailed analysts’ estimates. Consumer confidence fell in December to a five-month low, according to a December 21 report. The Thomson Reuters/University of Michigan consumer sentiment index slid to 72.9, the weakest since July, from 82.7 in November.
In another sign that consumers are pulling back, US online sales increased 8.4 percent this holiday season, compared with last year’s almost 16 percent gain, MasterCard Advisors SpendingPulse said.
As fiscal cliff apprehensions bear on the trades today, and as consumers are seen pulling back, a short position is suggested for the USDCHF today. Technical price corrections are still likely, however.
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