ForexLive Asia Wrap for Wednesday 02 Jan 2013 (Happy New Year!): All Cliff, All The Time
Big day for The Cliff! The Asian session started off very skittishly indeed, with all Europe and US markets closed, and a holiday in Japan. Early Fiscal Cliff news was concentrated on how it was likely that House Republicans would reject the Senate-endorsed bill. As the morning progressed it became apparent that Speaker Boehner was taking a very pragmatic line and was prepared to kick as many heads as necessary to get the bill to pass. Late in the Washington night the bill duly passed, 257 to 167 (85 Republicans, including Boehner and Ryan but not Cantor, voted in favour)
EUR/USD, as expected, was a focal point for Fiscal Cliff developments - it traded some wide swings in the illiquid early morning, as high as 1.3220 and back down to 1.3190. As news started to seep out that an affirmative vote was likely, then most likely, then a done deal, the rate built support, crept higher, then powered through 1.3220, 40, and 60. It reached as high as 1.3284 before stalling a little, but hit 1.3300 soon after. It attempted this high again after the affirmative vote, but ran into profit-takers and 1.3300 sell orders.
AUD, NZD and GBP all went along for the 'risk on' ride. Cable outperformed them all (Adam had a great observation he shared with ForexLive readers on Dec 31 regarding Cable's relative strength behaviour recently). It had been relatively illiquid in Asia for the past week during the Christmas/New Year period, but extended moves were rare - today made up for it!
USD/JPY performed strongly today on continued talk of government support for Yen weakening and on the Fiscal Cliff developments.
Other news/data today:
Australian Industry Group's Performance of Manufacturing Index for December 2012 at 44.3 is still showing contraction, unchanged from the November figure of 44.3 (revised from 43.6)
Australia: December RP Data – Rismark Home Value Index -0.3% (vs. 0.0% for November)
HSBC South Korea December Manufacturing PMI at 50.08 for December, just barely into expansion (November was 48.2, October was 47.4)
While HSBC Taiwan Purchasing Managers' Index for December came in at 50.6 (from 47.4 in November)
South Korean Current-Account surplus came in at $6.88 billion for November (highest monthly amount on record and well above the $4.34 billion in November last year).
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.