Forex Flash: Fiscal cliff plan stonewalled – UBS

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FXstreet.com (Barcelona) - Headlines on the US fiscal cliff seemed to trigger early moves with both the AUD and the JPY. This stemmed from the fact that Boehner suddenly dropped the idea of asking the House to vote on a Republican plan to avert the fiscal cliff. According to Research Analyst Gareth Berry at UBS, "It seems the plan would have failed to pass by a margin of a few votes, and so a decision was made not to proceed with it."

"The headlines looked worse than they were however - after all the plan was doomed to begin with given Democrats had already decided not to put it to a vote in the Senate, and US President Obama had already threatened to veto it if necessary." Berry explains. The nervous market reaction was justified to some degree however, given it illustrates just how difficult it will be to reach a compromise solution before year-end.

Finally, "The overnight antics are probably a taste of things to come over the next week or two - brace for higher volatility until a benign outcome emerges." Berry warns.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Forex and Currencies

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