In the week that divided 2012 and 2013, financial markets took a sharp upward trend. Shortly before the end of 2012, fears of the US falling down the fiscal cliff increased even more and markets lost their patience and were reasonably coloured in red.
However, in the early hours of the new year, US policymakers managed to reach an agreement on tax changes, which led to a strong rise of US indices in the first session for 2013.Despite the fact that talks on government spending cuts are still to be held, investors welcomed the news of the agreement on the tax burden on US households, so US30, USSPX500 and USTECH100 added respectively 3.84%, 4.64% and 4.45% to their value.
Reaction by investors in European shares did not come late and caused an increase of about 3% in the leading indices on the continent. The response in Asia was similar, with the JAPAN225 adding 3.88% only in the first week of the year.
Another important news coming from the minutes of Fed’s last meeting boosted the dollar. It turns out that 2013 might be the last of quantitative easing for the US economy, which clearly means an appreciation by the greenback.
The major currency pairs EUR/USD and GBP/USD also registered significant movements leading to losses of 135 and 90 pips, respectively. On the other hand, USD/JPY increased by 206 pips in the last five days.
Precious metals registered tentative and slight movements. Gold closed the week at 1656 dollars a troy ounce, or a fall by only 0.05%, while silver ended the period at 30.19 dollars, or 0.50% rise compared to a week earlier.
Looking ahead to the current week, no significant economic data is expected. On Tuesday, however, a new season of US public companies’ reports will be launched. The start will be given by Alcoa (AA) while on Friday, Wells Fargo & Co (WFC) will attract the attention of both investors and analysts.
Source: dfmarkets.co.uk
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