US Government in partial shutdown
City Index October 1, 2013 2:41 PM
<p>The main headline this morning is that the US government is partially shut down for the first time in 17 years after congress failed to […]</p>
The main headline this morning is that the US government is partially shut down for the first time in 17 years after congress failed to reach a compromise over President Obama’s health care reforms, with Republican Senator Reid quoted as saying “we will not go to conference with a gun held to our head”.
The USD is, not surprisingly, under pressure this morning as headlines hit that 800,000 federal workers will potentially not be paid. With Thanksgiving just a month away, the market will looking for a quick resolution that if not seen could derail the US economic recovery, with many pointing out that the real risk is still to come in the event of a breach of the debt ceiling, which will no doubt see the US rating downgraded again.
In other news, the Japanese Tankan manufacturing index recorded a robust reading of 12 versus the consensus expectation of 7 as Japanese Prime Minister Shinzo Abe confirmed that the sale tax will indeed rise to 8% in April, with a stimulus package of JPY 5bn likely to be announced in the near future in an effort to combat the tax hike effects.
The AUD enjoyed a positive session following a neutral statement from the RBA meeting where, as expected, rates were left unchanged as retail sales data rose to 0.4% versus the 0.3% consensus. Chinese official PMI was slightly disappointed at 51.1 but this had limited impact on the lifestyle currency.
Today’s session will no doubt be dominated by proceedings in the US Senate, which are due to resume at 1.30pm (London time), with this morning’s session focusing on manufacturing PMI data from Europe and the UK.
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