US President Barack Obama has expressed confidence in reaching a resolution for the ‘fiscal cliff’ scenario after a favorable discussion last Friday with the top leaders of the Democrats and Republicans in Congress. A budget deal is needed to avoid the ‘fiscal cliff’, a scenario wherein the year-end expiration of Bush-led tax cuts would trigger a $600-billion assortment of automatic spending cuts and tax increases which would burden Americans next year. “I am confident we can get our fiscal situation dealt with,” Obama told reporters at a recent Bangkok news conference. The US President is set to meet key leaders in Thailand and other Southeast Asian nations. After a less-than-24-hour stop at Thailand, Obama will visit Myanmar and Cambodia in his first foreign trip after getting reelected for his second term.
Earlier today, New Zealand released the PPI data and it came in at minus one percent, much weaker than the consensus of 0.3 percent. This is the first negative PPI reading since November 2009. This could give the RBNZ flexibility in terms of rate adjustment in the future.
German Bundesbank President Jens Weidmann’s speech is currently underway. He is slated to present a speech at the Annual Euro Finance Week, entitled "The Dilemma between Crisis Management and Institutional Reform."
Today is fairly light in terms of news release and the market will focus on the US Existing Home Sales (with a forecast of 4.76 million), and the NAHB Housing Market Index which surveys a group of homebuilders regarding home sales in the US.
After three days of successive losses, gold climbed along with other commodities as the US dollar weakened and as exchange-traded products (ETP) holdings rose to a record. The $1,700 level attracted decent demand from investors. Price is currently hovering above $1,720. The $1,740 area will pose as an acid test if there is indeed substantial demand for the yellow metal.
Meanwhile, the Israel-Hamas conflict still poses as a dark cloud over oil and continues to pressure oil to the upside. Oil has gained for the second day and there is no definite sign that it will weaken soon. 89.00 is a key near-term resistance and if breached, it will unlock the potential for an assault towards 92.00 – 95.00.