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Markets remain fixated by Fiscal Cliff

15.12 AEDT, Friday 9 November 2012

Markets remain fixated by Fiscal Cliff


By Tim Waterer (Senior Trader, CMC Markets)

Financial markets are finding it difficult to adopt a ‘business as usual approach’ in the wake of the US election, with Wall Street fixated by Fiscal Cliff ramifications. The resulting defensive moves by traders in recent sessions is keeping the US Dollar well supported, particularly when combined with the negative rhetoric out of Europe regarding the ongoing woes in the region.

Chinese inflation data was well received by markets across Asia given that the lower reading would appear to allow more room for monetary easing by the PBoC. Asian bourses bounced from the session lows with traders finding some solace from this one positive development amid all the doom and gloom from the US and Europe which is putting markets on a tentative footing.

The AUD reclaimed the 1.04 level following the Chinese CPI data as traders took encouragement from the softer print. The AUD had been following the similar weaker trend exhibited by stocks across Asia following another session of negativity on markets abroad. Thursdays solid local jobs data is still providing something of an assist to the AUD however the generally negative themes from offshore are limiting any moves to the upside with concerns over the Fiscal Cliff capping risk assets at present.

It was another day of red numbers across the ASX with traders being in a ‘risk off’ frame of mind with traders concerned over the potential trouble brewing in the US and Europe. Ex dividend trading in the financial sector also weighed on the local index today, however stocks did recover some ground after the lower Chinese CPI allayed some fears. Focus will now be on further Chinese data due for release after the Australian market close including Retail Sales and Industrial Production numbers.

ends

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