Yesterday marked Luther King Jnr’s Birthday in the United States and therefore a Bank holiday meant there was no economic data for investors as we start the week.
Focus started the week in the states on President Donald Trump and his Government shutdown, which has been making headlines for its recent economic disruption due to the 800,000 federal workers now affected.
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Over the weekend, it emerged that President Trump attacked the Democrats for rejecting his proposals to end the shutdown – before he had even had a chance to present them.
This is likely to have negative effects on the USD in the months to come. Some federal workers haven’t been paid since the 22nd December and are setting up goFundme pages in order to clothe, bathe and feed children and loved ones. The longer that this goes on – the bigger the drag this will have on the US economy and the dollar in the coming months.
Trade tensions between China and the US were cited as the biggest threat to global growth this year. The International Monetary Fund also added that if talks scheduled between the two nations fail this week, then this could also bring the global outlook lower.
However, this may not be a bad thing for the USD which benefits in times of uncertainty due to its safe haven status.
That being said, China’s most recent Gross Domestic product figures which signalled the worst economic performance in 5 years has highlighted China’s inability to enter into a full blow war with the US. I personally think that if China start to back down to President Trumps trade demands, the dollar and global outlook may start to improve.
To end the week, the latest jobless figures and latest Purchasers Managers Index reports will be released which could bring the Dollar lower. The recent Government shutdown will start to feedthrough into economic releases, the question is when?
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