U.S. Session Recap – January 6, 2013

  • Harvard economist Larry Summers says fiscal stimulus might be necessary
  • Nikkei survey shows companies expect drop in sales after tax hike
  • Australia AIG services index down from 48.9 to 46.1

Markets are off to a slow start this Monday, but liquidity is expected to pick up as most traders return to their trading desks this week. Over the weekend, Harvard economist Larry Summers noted that the U.S. economy might need fiscal stimulus in order to spur full employment. He pointed out that further monetary policy stimulus from the Fed could create asset price bubbles and recommended that the government focus on infrastructure investments instead.

Just recently, a Nikkei survey in Japan showed that 70% of retailers are expecting a drop in sales after the sales tax hike from 5% to 8% is implemented in April. The good news though is that 75% of these companies also expected the negative effect to taper off in September this year. Majority also predicted that demand will surge in the months leading up to the actual tax hike.

Meanwhile, Australia reported a decline in its AIG services index from 48.9 to 46.1. This could weigh on the Australian dollar for the rest of the Asian trading session since there are no other major reports up for release in the next few hours. Make sure you keep close tabs on market sentiment then!

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