News on the US real economy was positive, with an increase in existing home sales and another increase in two home price indices. But this good news was more than offset by renewed worries about the famous 'fiscal cliff', fears that led to a sharp fall (-1,5%) in Wall Street futures.
The ups and downs of these negotiations are to be expected and will cause more volatility, but the deep current of the international cycle is turning more positive. In Asia, the regional index first gained and then lost, while the yen remains above 84 and will weaken further. It must be remembered that during these years of crisis the yen is the currency that has undergone the strongest real appreciation, and now, with an economy that is 9% below the level when Shinzo Abe – the new prime minister – he was head of government five years ago, aid for exports is urgently needed.
The euro is still elevated, at 1.32 levels while the Australian dollar has finally weakened: Treasury Secretary Wayne Swann officially backed out of running a budget surplus in 2013. In Australia too, austerity for its own sake is losing sacredness and ground.
