The bottom area around the hottest dollar index 80

2022-08-02
  • Detail

The bottom area near the US dollar index 80 is still solid

the bottom area near the US dollar index 80 is still solid

December 6, 2012

[China paint information] in December, the foreign exchange market is increasingly concerned about the US fiscal cliff. If it really falls into the fiscal cliff, the decline of the US economy and the rise of the unemployment rate will make the Federal Reserve continue to intensify quantitative easing 3, and the US dollar index will repeat the sharp decline in the previous two rounds of quantitative easing. However, we believe that since the US long-term interest rate is at a historically low level and the Obama administration will give priority to economic growth, it is possible to reach a package compromise with Congress to avoid the fiscal cliff. Therefore, it is expected that the panic of the fiscal cliff will probably dissipate by the end of the year, and the bottom of the US dollar index near 80 is still solid

the fiscal cliff became a hot spot in the foreign exchange market

the US general election in early November 2012 has just been settled, and the fiscal cliff issue immediately became the focus of the US dollar exchange rate market. The fiscal cliff refers to the impact of tax increases and spending cuts on the U.S. economy after a series of tax relief and spending maintenance bills expire at the end of 2012. Therefore, the fiscal cliff does not refer to the rising US deficit, but the possible negative impact on the US economy if the deficit reduction bill takes effect on time

the Obama administration will spare no effort to avoid the fiscal cliff

whether the fiscal cliff will occur depends on the political game between the Obama administration and Congress. The Obama administration can adopt two completely different attitudes towards the fiscal Cliff:

first, it sincerely hopes to avoid the fiscal cliff. On how to extend tax incentives and postpone spending cuts, the Obama administration will inevitably have to bargain hard with Republicans in Congress and even Democrats who pay attention to their own political future and the interests of voters in their constituencies

the second is to assume a superficial attitude of solving the fiscal cliff. In fact, we are happy to see that the fiscal deficit caused by the automatic start of the fiscal cliff has reduced Clariant as a more important tool for acquiring or completely acquiring businesses. In this way, the inaction of the Obama administration will make it impossible for Republicans in Congress to make difficulties and political compromise

of course, the reason why the fiscal cliff has become the focus of the market's attention is, in the final analysis, that the market lacks confidence in the political solution of the fiscal cliff due to the saw saw saw battle between the US government and Congress over the budget in history. In 1993, the deficit reduction bill of Democratic President Clinton was passed by only a narrow majority when the Democratic Party had a majority in both the Senate and the house of Representatives. Last month, the negotiations on raising the U.S. debt ceiling led to a downgrade of the outlook for the U.S. sovereign credit rating. No wonder the market is so nervous about the fiscal cliff

therefore, although the fiscal cliff is a tug of war between the government and Congress, the government's attitude towards the fiscal cliff is a prerequisite for whether the cliff can be avoided. If Obama does not need to add this kind of plastic additive again, the Obama administration sincerely wants to avoid the occurrence of the fiscal cliff. Although the negotiation process with Congress will be difficult, the political resistance to maintaining tax incentives and maintaining expenditures is always less than that to increase taxes and reduce expenditures. Therefore, it is possible for the government and Congress to reach a package of compromise plans to avoid the occurrence of the fiscal cliff; On the contrary, if the Obama administration gives priority to deficit reduction and is happy to see the fiscal cliff start, the US economy is likely to slide off the cliff again

according to the estimates of the US Congressional Budget Office, if the US government and Congress fail to reach an agreement on whether to extend relevant tax relief and maintain expenditure, and allow the fiscal cliff to start, the US real GDP growth in 2013 will be -0.5, dragged down by the rapid decline of the fiscal deficit, which will drive the development of these energy-saving and environmentally friendly building materials and related manufacturing technologies%, thus making the US unemployment rate rise to 9.1% in the fourth quarter of 2013. Such an estimate is obviously not good news for the US economy, which has slightly improved but still has a fragile recovery prospect. It also has a major impact on the trend of the US dollar exchange rate: if the tax increase and expenditure reduction measures are automatically started, the decline of the US economy and the rise of the unemployment rate will make the US Federal Reserve continue to intensify quantitative easing 3, and the US dollar index will repeat the sharp decline in the previous two rounds of quantitative easing

When talking about deficit reduction in the United States, people cannot help thinking of bill, the former Democratic president Clinton. During Clinton's term of office, the United States changed from a huge fiscal deficit to a fiscal surplus, which became a major achievement for Democrats to boast of reversing the cumulative trend of fiscal deficits in the Reagan Bush era. Therefore, people will inevitably compare Obama with Clinton. Will the Obama administration take Clinton's position of giving priority to deficit reduction, so as to deal negatively with the negotiations on the fiscal cliff and allow the fiscal cliff to start to improve the fiscal deficit

if we take the Clinton era as a reference, we believe that Obama will try his best to avoid the fiscal cliff and give priority to stimulating the economy, so as to postpone the problem of fiscal deficit reduction. There are two reasons:

first, the important reason for the Clinton era to vigorously reduce the fiscal deficit is to lower medium and long-term interest rates through deficit reduction, and to achieve economic growth through medium and long-term interest rate leverage rather than large-scale government spending. At present, due to the stimulation of economic globalization and the quantitative easing policy of the United States, the medium and long-term interest rates in the United States are at a new low in history. The Obama administration has no need to imitate Clinton's economic policy

second, from the perspective of the dynamic relationship between fiscal deficit and economic growth, whenever there is a certain guarantee for economic growth and the speed cannot be accurately controlled, the fiscal situation will improve to a certain extent, which makes the Obama administration not sacrifice the benefits of short-term economic improvement for the long-term goal of deficit reduction when the current economy is just getting better

to sum up, we believe that the fiscal cliff can be avoided. The panic based on the fiscal cliff is likely to dissipate by the end of the year. Therefore, the bottom of the US dollar index near 80 is still solid

Copyright © 2011 JIN SHI