Forex Flash: Threat to USD/JPY rally comes from US – Westpac
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USD/JPY
FXstreet.com (Barcelona) - According to Sean Callow, a Global Strategist at Westpac, "A threat to the USDJPY rally of course comes from the US side, where we are likely to see plenty of gloomy headlines on the fiscal cliff negotiations in the weeks ahead, keeping a lid on US Treasury yields."
"As we said last week, we were surprised to see some optimism about a swift agreement and we remained dubious even after Friday's handshaking at the White House which helped stoke equity gains." he adds. The Politico sources story seems very much on the money: "The opening round of negotiations this week between White House and senior GOP congressional staffers left both sides pessimistic about their ability to reach a quick deal on averting the fiscal cliff."
"The House sits again from Tuesday; we suspect the squabbling will provide ongoing weight on Treasury yields as the size of the fiscal hit from 1 January threatens to grow. Remember this is not a yes/no outcome like raising the debt ceiling." Callow warns.
"As we said last week, we were surprised to see some optimism about a swift agreement and we remained dubious even after Friday's handshaking at the White House which helped stoke equity gains." he adds. The Politico sources story seems very much on the money: "The opening round of negotiations this week between White House and senior GOP congressional staffers left both sides pessimistic about their ability to reach a quick deal on averting the fiscal cliff."
"The House sits again from Tuesday; we suspect the squabbling will provide ongoing weight on Treasury yields as the size of the fiscal hit from 1 January threatens to grow. Remember this is not a yes/no outcome like raising the debt ceiling." Callow warns.
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