The dollar is extending its recent losses against its major European competitors on Tuesday, but is little changed in comparison to the Japanese Yen. The continuing efforts to find a bipartisan solution on the fiscal cliff before year end were in focus today. The dollar's weakness against Europe has worsened after some comments made by House Speaker Boehner and his "Plan B" proposal.
President Obama offered a new proposal to Republicans on Monday, The President will now agree to a deal that exempts everyone except for those making more than $400,000 a year, backing down from his position that tax hikes should begin at $250,000 in annual income. Obama is now calling for $1.2 trillion in new revenue, down from the $1.6 trillion he proposed last month.
However, House Speaker John Boehner told reporters after meeting Tuesday, "I made it clear to president that I would put $1 trillion of revenue on table if he were willing to put $1 trillion of spending cuts on table."
Boehner also announced a "Plan B" where only the extremely wealthy, those making more than $1 million a year, would be hit with new taxes.
The recent announcement by the European Union leaders to establish a single supervisory mechanism (SSM) for banks would help restore investor confidence and would also contribute to reviving inter-bank lending, European Central Bank President Mario Draghi said Monday.
Draghi said he expects the governments to complete the legislative process swiftly. After the adoption of the relevant legal acts, the ECB will start the preparations in order to launch the SSM within the timeline foreseen by the legislators.
The dollar has dropped below a trading range around the $1.3160 level against the Euro on Tuesday, to a 7 1/2 month low of $1.3231.
The Funding for Lending Scheme launched in August helped to reduce market funding costs for UK banks, the Bank of England said in its Quarterly Bulletin published Tuesday.
"Early signs have been encouraging," it said. By reducing funding costs, it should lead to more and cheaper credit flowing into the real economy.
The buck has also fallen below a range around the $1.6210 level against the pound sterling Tuesday, to a 2 1/2 month low of $1.6268.
U.K. annual inflation held steady in November at the highest level since May on increases in food and energy bills, official data showed Tuesday. Consumer price inflation stabilized at 2.7 percent in November, figures from the Office for National Statistics revealed Tuesday. Inflation was at a 34-month low of 2.2 percent in September.
Residential property prices in the U.K increased at the slowest pace in six months in October, data released by the Office for National Statistics showed Tuesday.
The house price index increased 1.5 percent on an annual basis in October, slower than the 1.7 percent gain recorded in September. The latest gain was the weakest since April, when house prices moved up 1.4 percent.
The greenback has improved slightly from yesterday's low of Y83.603 against the Japanese Yen, to around Y84.090 on Tuesday.
Homebuilder confidence in the U.S. improved for the eighth consecutive month in December, according to a report released by the National Association of Home Builders on Tuesday, with the housing market index rising to a new six-year high.
The report showed that the NAHB/Wells Fargo Housing Market Index climbed to 47 in December from a revised 45 in November. Economists had expected the index to edge up to 47 from the 46 originally reported for the previous month.
by RTT Staff Writer
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