Risk aversion was the name of the game as the U.S. Congressional Republicans failed to support their Speaker of the House John Boehner’s plan to resolve the impending fiscal cliff. Republicans appeared to have balked at the prospect of tax hikes for the wealthiest Americans. As a result the safe haven Japanese Yen edged higher in the earlier morning hours in Tokyo, while risk currencies like the Euro edged lower against the U.S. Dollar. This will come as a blow to both the Speaker and the Democratic President who worked together to get this initiative passed before the $600 billion in spending cuts and tax increases comes into effect.
As reported at 1:50 p.m. (JST) in Tokyo, the EUR/USD pair slipped 0.4% lower to trade at $1.3195, off the 8-month peak of $1.33085 that had been struck on the EBS trading platform on Wednesday. While analysts expressed nervousness about the looming fiscal cliff remaining unresolved as the year end approaches some market players anticipate that a compromise could be in the works.
The Japanese Yen made gains despite the Bank of Japan’s efforts to the contrary; the USD/JPY pair traded at 83.91 Japanese Yen, a 0.6% fall and well off the 20-month peak struck yesterday when the pair touched on 84.62 Yen. The EUR/JPY pair fell even harder with a 0.9% drop to 110.72 Japanese Yen, off the 16-month high struck yesterday when the pair hit 112.59 Yen.
Fiscal Cliff Concerns Quash Risk Trade
After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.