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28/11/2012 02:32:17 PM
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Publish Date28/11/2012 02:32:17 PM
The Japanese yen advanced against majors, while the euro dropped, as renewed concerns regarding the U.S. fiscal cliff turned back to markets after the positive effect of the Greek debt deal has faded.
On Monday, euro area finance ministers agreed with the IMF on Greece`s coming fiscal path as they agreed to reduce Greece’s interest rates and gave it more time to pay back aid loans.
However, the effect of the deal diminished quickly as attention shifted to the spending cuts and tax increases worth $607 billion set to take effect from January as it could push the world`s largest economy back into stagnation.
Meanwhile, there are worries that the While House and Congress can reach an agreement over the automatic tax hikes and spending cuts when they meet this week.
U.S. Senate Majority Leader Harry Reid said he is “disappointed” due the sluggish progress in negotiations between Democrats and Republicans to avert the fiscal cliff.
“If the fiscal cliff is not avoided, a large negative shock could bring the U.S. and the global economy into recession,” the OECD said in its Economic Outlook report released yesterday.
The EUR/JPY pair dropped from a high of 106.34 to a low of 105.37 where it is currently trading around 105.50.
The trading range expected today is between the key support at 103.50 and the key resistance 108.85.
On the other hand, the green currency rebounded for a second day versus a basket of major currencies, as depicted by the dollar index which surged to a hit a high of 80.58 after opening today`s trades at 80.35.
Later in the day, the U.S. will release its new home sales data for the month of October followed by the Fed`s Beige Book.
Against the yen, the dollar showed a drop to record a low of 81.70 from the day`s high of 82.20 while it is currently trading around 81.83, where the trading range for today is among key support at 80.75 and key resistance now at 82.80.
As for the sterling pound, it retreated against the greenback amid the absence of fundamentals from the U.K. as it followed the general sentiment in the market.
The GBP/USD is meanwhile trading around 1.5970 from the day`s opening of 1.6022, where the trading range for today is among key support at 1.5820 and key resistance at 1.6180.
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