Forex News | Currency News by Forexlive

• We are 1 hour and 15 minutes away from the release.
• A reading of 49.6 is expected following a surprisingly strong 50.3 last month.
• The market is likely priced a few ticks lower than the ‘consensus’ after last week’s flash estimate of 48.8 from HSBC.
• In November, the 49.0 print was the lowest since early 2009.
• The high estimate is 51.2; low 48.2.
• The average miss from the consensus over the past three months has been slightly more than 1 point.
• Chinese stocks were higher yesterday, partly on rumors of a 52 print

The trend is clearly lower and with hopes for reserve ratio cuts diminishing, the Australian dollar could be in for a rough ride.

Bloomberg uncovered Fed finances with a Freedom of Information requests. Some deep pockets with Fisher holding more than $20m and Dudley more than $9.5m.

Lockhart was snapping up everything in his Schwab account.

Jan CPI 3.4% vs 3.6% expected.

Gives the BOK some room flexibility.

It’s such a magnet. Can’t imagine we won’t touch it again.

Risk appetite deteriorated around the close in Europe and it has been sideways since. The calendar is the catalyst here with the first of the month generally driving positive risk appetite.

Data includes Australian Q4 house price indx at 0030 GMT. It’s expected -0.6%. At 0100 GMT is China’s official manufacturing PMI, expected to dip to 49.6 from 50.3. Finally, Japanese labor cash earnings exp -0.3% at 0130 GMT.

I’ll be covering the first half of the shift, Sean will be here in about 3 hours.

–Budget Groups Say CBO’s Baseline Understates Severity of Deficit Woes
–Committee For Responsible Federal Budget Urges ‘Smart’ Deficit Cuts
–Concord Coalition Says Realistic Assumptions Show $12T in New Debt

By John Shaw

WASHINGTON (MNI) – Several leading budget think tanks Tuesday said
the new budget and economic report by the Congressional Budget Office
shows how serious the nation’s fiscal problems are once realistic
adjustments are made to its headline projections.

“The good news is that under current law assumptions, the debt
would become more manageable in the medium term. The bad news is that
these policy assumptions are politically unrealistic, suboptimal, and
not a long-term fix,” the Committee for a Responsible Federal Budget
said in a statement.

Maya MacGuineas, the group’s president, said the CBO’s current law
baseline shows budget deficits falling sharply, but added that the
assumptions underlying these numbers are dubious.

Among other things, they assume that all the Bush era tax cuts will
expire and deep spending cuts will be imposed.

“These budget projections show that getting the debt under control
is not impossible, but they also represent a path that is both unlikely
to occur and far from the best way to govern,” she said.

“Congress should not rely on automatic cuts and large sudden tax
increases when the economy is likely to still be weak,” MacGuineas said.

She added that there are both “smart” and “mindless” ways to cut
the deficit. “Let’s hope Congress acts to pass a well-thought deal
rather than letting some automatic and blunt changes do their work for
them.”

Bob Bixby, executive director of the Concord Coalition, said the
CBO report is packed with “harsh realities” for those willing to examine
the numbers closely.

Bixby said his group has developed a baseline that incorporates
likely policy changes and it shows cumulative deficits of about $12
trillion over the coming decade.

Bixby said Congress should adhere to last year’s budget
agreement–and then do many more things over the coming years.

“We need a comprehensive plan that spreads the burdens and
sacrifices fairly, and includes all major areas of the budget:
entitlement programs, domestic discretionary spending, defense and
taxes,” he said.

The CBO reported Tuesday that it expects the fiscal year 2012
deficit to be $1.079 trillion, down from $1.296 trillion in FY’11.

Assuming current budget and tax laws continue, the CBO sees
deficits of $585 billion in FY’13, $345 billion in FY’14, $269 billion
in FY’15, and $302 billion in FY’16.

Looking further ahead, the CBO sees deficits of $220 billion in
FY’17, $196 billion in FY’18, $258 billion in FY’19, $280 billion in
FY’20, $279 billion in FY’21, and $339 billion in FY’22.

For the FY’13-17 period, the CBO sees cumulative deficits of $1.721
trillion. For the FY’13-22 period, the CBO sees cumulative deficits of
$3.072 trillion.

However, CBO director Doug Elmendorf said Tuesday that an
alternative fiscal policy baseline his agency has developed shows the
U.S. racking up about $11 trillion in additional cumulative deficits
over the next decade, not the $3 trillion that is in the CBO’s official
estimate.

At a briefing, Elmendorf emphasized that under budget law CBO must
make its baseline estimates by assuming current tax and spending laws
are unchanged.

He said this budget convention is becoming “less and less useful,”
and added the CBO report provides a “benchmark, not a forecast.”

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]

The CMHC, which is somewhat like Fannie and Freddy in the US, says it is rationing mortgage insurance. As of Sept. 30 it had issued $541 billion of insurance versus the legislated limit of $600B.

Housing is the biggest risk to the Canadian economy. I imagine the govt will go to the tried-and-failed playbook that dates back centuries and just raise the limit thus kicking the can down the road.

By Carina Steckenleiter

WASHINGTON (MNI) – South Carolina Republican Sen. Jim DeMint
Tuesday warned this is the last chance for the United States to turn
around its fiscal situation and fix the economy.

In comments made while presenting his new book, “Now or Never.
Saving America from Economic Collapse,” at the Heritage Foundation,
DeMint bemoaned the missing sense of urgency across the country, despite
the enormous deficits it faces and the fact the government plans to
increase public spending.

“We don’t have to balance the budget this year, but we do have to
put the country on a course” he said.

He sees balancing the budget as the key to a prosperity of the
United States: “We have to show ourselves and to the world that we are
committed, determined and have a plan to move towards a balanced budget
and that we are able to get our fiscal situation under control.”

Stressing the decentralization of power as crucial in order to
achieve this goal, DeMint highlighted education and healthcare as
potential areas that require action.

He also criticized the Obama administration for not having the goal
of consolidating the highly indebted national budget.

“We could debate whether to raise taxes or to cut spending or
some combination of both,” he said. “But it makes no sense to have the
debate if there is no agreement that we need to balance our budget.”

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]

• The first month of 2012 wraps up with NZD as easily the best G10 currency, up 6%.
• AUD second +3.75%
• CHF third +2.09%
• The euro beat USD and JPY but was lower against everything else
• Emerging market currencies were up 6-8%
• Silver +19% and gold +11%
• The US dollar was walloped against just about everything except the Syrian pound. Thank QE3 for that.

• Chicago PMI 60.2 vs 63.0  exp
• US consumer confidence 61.1 vs 68.0 exp
• Case-Shiller Nov home price index -3.67% vs -3.3% exp
• Q4 employment cost index +0.4% as expected
• Guardian: Greek politicians battling Troika reforms
• Canada Nov GDP -0.1% vs +0.2% exp
• US CBO forecasts $1.1 trillion deficit vs $1.3T last year
• Rtrs: Greek deal could come Wed but ECB contributions a sticking point
• Venizelos: net present value of haircut could exceed 70%, deal deadline is Feb 5
• S&P 500 down 0.1% to 1312, first four-day decline since Nov.
• EUR lags, NZD leads

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