Investors return to their desks faced with a US government shutdown…
2019 has already started with drama over in the US with a government shutdown that has been in effect since just before Christmas. With over 30% of government departments out of action it’s left the greenback with few friends and has consequently allowed its peers to take advantage with the pound and euro pushing toward the $1.28 and $1.15 levels, respectively. Now that participants are heading back to their desks to commence the new year, should this saga continue, then we may well see a US dollar which continues to give up ground. There are signs that Trump is looking to strike a deal but it’s early days yet – for now the buck remains under pressure.
The holiday-shortened week does contain a number of important releases which could set the tone for the month of January. From the UK’s perspective, the next 3 days will offer us a new set of PMI numbers which reflects activity from December; today will be manufacturing followed by construction tomorrow and the all-important services report on Friday. In addition to these releases, we’ll also be following the Brexit situation very closely. Time is running short will no solution in sight. The next few months could be the most important in the process so far. GBP exposed clients be aware. The pound already looks set to test the €1.10 against the euro and in respect to the greenback, shut down or no shutdown, any bad news and GBPUSD will be heading south.
Elsewhere, this week sees manufacturing data from across the globe, this includes Europe and the USA. Additionally, the first Friday of the month always brings the US jobs data. Thursday sees the private payrolls number while Friday sees the full report which includes both the private and public sectors as well as the unemployment rate and average hourly earnings. No doubt the report should be impacted by the current government shut down. Happy New Year – all the best for 2019!
Written by Viv Savani. 8:45am, January 2nd 2019
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9:50am, May 1st 2019
Labour Day holiday set to reduce flows – volatility still expected…