Potential US Shutdown Pushes Dollar Towards Three-Year Lows
22 Jan 2018
Published in: The Chamber Patron Group
Please find RationalFX's daily market report for today together with all the economic data/times for today's event(s):
Sterling weakened on Friday after disappointing UK retail sales data dented broadening optimism about a currency that is enjoying its best winning streak against the dollar since 2014.
Before Friday's drop, sterling had been rallying against the dollar, with traders welcoming positive noises from the European Union about negotiations for Britain's exit and growing risk appetite encouraging sterling bulls to add to their positions against a widely weakened dollar.
Figures from the Office for National Statistics showed 2017 was the weakest year for retail since 2013 and a drop in sales of 1.5 percent from November, as consumers squeezed by high inflation continued to keep a tight grip on spending.
Despite the gloom around the retail sector, investors have added to their sterling holdings in recent weeks betting that a steep undervaluation on a trade-weighted basis against its rivals would disappear amid growing appetite for risk assets.
The dollar held steady above a three-year low against its major rivals on Friday, marking a fifth week of falls and its longest losing streak since May 2015 as worries over a possible U.S. government shutdown weighed.
On Thursday, the U.S. House of Representatives passed a bill to fund government operations through to Feb. 16 and avoid agency shutdowns from Saturday when existing allocations expire. The bill has yet to be approved by the Senate, where it faces an uncertain future.
Democratic Senate leader Chuck Schumer met with Republican President Donald Trump on Friday to find ways to avert a shutdown. Schumer suggested some progress was made but they still had "a good number of disagreements."
This is the first time a government shutdown has happened while one party, the Republicans, controls both Congress and the White House.
The vote on Friday was 50-49, falling far short of the 60 needed to advance the bill. With a 51-seat majority in the Senate, the Republicans do not have enough votes to pass the bill without some support from the Democrats.
The last government shutdown was in 2013, and lasted for 16 days.
All Day - EUR - Eurogroup Meetings
If you require any further information please contact Jaspaul Bains on 07738 386263. Alternatively, you can click here to send Jaspaul an email.
Post A Comment
You must be logged in to post a comment. Please click here to login.