Forex Flash: Dollar mixed as further signs of cliff progress emerge – Wells Fargo

FXstreet.com (Barcelona) - Nick Bennenbroek, Head of Currency Strategy at Wells Fargo notes that USD is mixed to lower as market participants monitor the US budget talks for signs of further progress.

Since the weekend, proposals by both the Republican leadership and the White House have moved closer together on the issues of increased tax rates on higher income earners, as well as total revenue and spending targets of any deal. The latest discussion represents the most concrete progress to date in the U.S. budget talks, helping to boost U.S. equity markets yesterday, while international equity markets and U.S. equity futures also suggest another up day for the markets.

Bennenbroek believes that arguably the markets mood has moved from one of hope to encouragement and favourable sentiment that is underpinning some foreign currencies.

He writes, "The euro has held its gains from recent days, the Scandinavian currencies are higher, and most emerging European currencies are up. The dollar-bloc currencies are down however, while emerging Asian and Latin American currencies are mixed, under performance which is mildly surprising given the prevailing market mood. While trading conditions are somewhat thin and could contribute to some unpredictable moves, our bias is for further foreign currency gains in the near-term."