There are reports that Vice President Joe Biden and Republican Mitch McConnell have made significant progress on a deal for the fiscal cliff: a higher tax rate for households that make $450K or more, a 20% capital tax and more. Hopes are high for a last minute deal, boosting risk trades.
Those are initial details, but perhaps the efforts will be fruitful as the clock is ticking to midnight. EUR/USD is on the rise, still within range.
Update: Fiscal Cliff Averted – Prepare for Another Crisis in 2 Months
It’s the morning of December 31st and Washington is busier than ever. In recent days, talks about a temporary solution have circled. Will we get a full deal? One Democrat representative, Chris Van Hollen,  said that chances are more than 50-50. Another one, Republican Bob Corker said that “We will have a solutionâ€.
EUR USD on potential fiscal cliff breakthrough – click to enlarge
EUR/USD has bounced from the 1.3170 line and is now at 1.3220. It is capped by minor resistance at 1.3240. Also USD/JPY is on the rise.
Here is more information from Bloomberg:
According to a person familiar with the talks who asked for anonymity when discussing them, Democrats are pushing for a trigger as low as $250,000 for capital gains and dividends with a tax rate of 20 percent.
It’s important to remember that currencies will have different reactions to any resolution. Here is a guide
Further reading:Â Here comes Cliff
