Forex Trading and the Fiscal Cliff

Forex Trading and the Fiscal Cliff. What should traders be looking out for as the Fiscal Cliff approaches?

Forex Trading and the Fiscal Cliff
As December comes to an end, let us be aware of increased volatility in the market. Unsure of what will take place if there is not a deal reached in D.C., investors should be cautious. In 2008’s financial crises, the Dollar soared in result of Risk Aversion. Whether or not Europe’s recent positive forecast will draw more funds away from the Dollar and to the Euro is in question.

With so much speculation of recession, speculation of Dollar weakness, and the U.S. economy in it’s unstable state, sentiment might be powerful enough to avoid a risk aversion scenario. I would love to hear your thoughts on this issue below in the comments, I think it is currently a very grey area.

Fiscal Cliff Decision: Down to the Wire
The President’s scheduled Christmas vacation is being cut short in result of the looming Fiscal Cliff.

With less than a week before automatic budget cuts and tax increases begin, Washington will likely be scrambling to make some sort of decision or compromise.

President Obama and Speaker of the House Boehner, have yet to reach an agreement to avert January’s automatically implemented budget cuts and tax increases.

Last week, Speaker Boehner’s proposal of “Plan B” was not even approved by his own party. This plan called for tax hikes only on American households making $1,000,000 or more per year, leaving the Bush era tax cuts implemented for the rest of the population.

There is still a willingness to work from the republicans and democrats but there doesn’t seem to be willingness to compromise. The republicans believe that the wealthy should not be taxed more than others. The democrats, in general, believe the rich should pay a higher percentage than those who are not as wealthy.

As we come down to the wire, tension will likely rise in D.C. as the two parties meet again to discuss a solution.

If we fall off of the cliff, economists predict a recession will occur.

Sen. Joe Lieberman commented Sunday, “We’re going to be here New Year’s Eve,”. With such dogmatic stances on each side, it is likely no decision will be agreed upon. Discussion could then turn into a blame game between the right and left as a possible recession initiates…

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