Still At Ends
Republican and Democrat leaders continue to see an impasse in Fiscal Cliff negotiations, with both sides expecting to work through the holiday season.
In comments made by House Speaker John Boehner in Washington yesterday, the policymaker criticized President Barack Obama’s budget plan once again – citing that the plan was “mainly tax hikes”. At this point, both party leaders have “some serious differences”. The US President is pressing forward with plans to keep higher income tax rates running on the top 2 percent of earners. Rates are expected to advance back to 39.5% for families making $250,000 or more. In addition, President Obama continues to seek a “permanent” increase in the US debt ceiling – which is expected to bump up at the over $16 trillion at the beginning of next year.
Countering Republican Party criticism, Democratic officials like Senate Majority Leader Harry Reid remained “very disappointed” with the current pace of negotiations and reinforced a willingness to “go over the cliff”.
Republican leaders remain committed to reducing entitlement spending, raising Medicare age eligibility and keeping Bush era tax rates. Republican concessions remain stalled at a mid rate for higher income earners and reductions in itemized deductions.
The discord between party leaders will likely continue to fuel US dollar weakness as it poses political event risk for the currency. Although short term technicals may allude to a potential turn, the bearish outlook remains intact for the longer term, and will likely do so till a resolution ahead of year’s end.
With support firmly established at the 0.9200 round figure, the USDCHF currency pair may be in for a brief uptick towards resistance at 0.9363. Unfortunately, with the level being reinforced by a descending trendline, the bearish outlook remains intact - making it less likely that any advance will continue beyond 0.9400.
Source: FXTrek Intellicharts