The current partial shutdown in the US is on track to become the longest in history as this week it passed 20 days. President Trump is adamant that he will receive funding for the Mexico border wall, however after his mid-term election losses in the House of Representatives the Democrats have control and aren’t prepared to provide a penny.
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It was widely reported yesterday, and also clarified by Trump’s Twitter that he walked into a meeting with Democrats, asked if they will give him money for the wall and received no a response, then left simply saying, “bye-bye”.
Late yesterday afternoon President Trump suggested that he could declare a State of Emergency in order to bypass the House and build the wall, either way the drama is clearly set to continue next week.
The US dollar has started to struggle against sterling since the 1st of January as the shutdown has dragged on. There has now been 800,000 Government employees out of work since before Christmas and as there doesn’t look to be a simple resolution it could soon affect US data moving forwards.
On the first day of 2019, the GBP/USD rate moved to 20 month lows, however in the last 11 days the rate has climbed over 2.5%. In monetary terms this equates to an increase of over $6000 on £200,000 compared to the the start of the year. This could be put down to the market uncertainty surrounding what the impact of the shutdown may be and when it may come to an end.
The US Producer Price index data will be released on Tuesday for the month of January and is expected to remain the same as last month at 2.5%. Wednesday will bring the latest Retail Sales data which will be keenly anticipated with regards to the debate surrounding the US economy. This will also be accompanied by the Import and Export price index for December.
Finally to end the week there will be the Baker Hughes Oil Rig count, Industrial Production and the Philadelphia Fed Manufacturing Survey.
In short, next week will be important for the Federal Reserve who need to make decisions on the economy along with anyone who may need to complete a transfer. Some of the uncertainty surrounding the US is starting to creep into the US dollar and this is becoming clearer as the greenback is losing ground against sterling and the euro. If you’re looking to complete a transfer in the near future involving US dollars make sure you’re in touch to discuss your best options.
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