The U.S. dollar gained across the board on widespread risk aversion as the so-called U.S. congressional “super committee” is expected to announce it failed to agree on deficit cuts, boosting the bid for safety. The Joint Select Committee on Deficit Reduction is a 12-member panel of both Democrats and Republicans, borne out of the debt deal reached in July to prevent the United States from defaulting on its obligations. As per the agreement reached between Democratic President Barack Obama and Republican Congressional leaders, the 12-member panel would find $1.2 trillion in deficit reduction over 10 years by November 23. Should no plan come together, $1.2 trillion in “trigger cuts” would occur, and the United States may face another downgrade by one of the major rating agencies in the coming weeks. The speculation caused European equities to fall over 2.0% and Standard and Poors future are currently trading 1.5% lower before the open. As a safe-haven, the greenback rallied to its highest level in five weeks against the Australian dollar and a six-week best against the Canadian dollar. Later this morning, the economic docket is expected to show that sales of existing homes fell 2.2% in October, down from –3.0% in the month prior. Tomorrow a revised reading of 3rd Quarter GDP is expected to hold steady at 2.5%. Wednesday sees the release of Durable Goods orders, weekly jobless claims and the minutes of the Fed’s last interest rate meeting. All markets will be closed in the United States on Thursday for the observance of Thanksgiving and there is no economic data set for release on Friday.
The Euro fell against the U.S. dollar, touching recent lows versus the greenback, as European equities plummeted and Spain’s Socialist government became the fifth the be ejected as a result of the region’s debt crisis. People’s Party leader Mariano Rajoy, beat Socialist Party’s candidate Alfredo Perez Rubalcaba. Rajoy has pledged to cut the budget deficit and regain the nation’s AAA credit rating, a tall task for a nation with unemployment over 20.0%. Meanwhile, France’s 10-year bond yield increased after Moody’s Investor Service said higher financing costs are increasing fiscal challenges for the AAA rated nation. There was no major economic data released in the Euro-zone today.
The British pound dropped to a one-month low against the dollar after a report showed U.K. home sellers cut asking prices by the most in a year amid increasing concern that the economic growth outlook is deteriorating. Prime Minister David Cameron said Britain is “well behind” where it needs to be on economic growth and the euro-area crisis was having a “chilling effect” on growth. As a result, the FTSE 100 Index of shares dropped for a sixth day, falling over 2.0%.
