Donald Trump addressed the nation on television last night confirming his passion to build a wall along the Mexican border. The cost is estimated to be around $5.7bn and the disagreement over the funding has led to the US Government being ‘shutdown’ for the last 18 days. 420,000 Employees of the government are working without pay and a further 380,000 have been sent home.
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The longest running shutdown was 1995 which lasted 21 days and there are many stories the disagreement is starting to bite for the 800,000 workers affected. The US dollar has been largely resilient although the possible economic slowdown and negative political fallout could bite Trump, and the US currency, in the future.
The US currency has been struggling to maintain too much traction in 2019 with concerns over an economic slowdown. Last week saw bad news for the iphone maker Apple, trigger a slide on the stock markets, before Friday’s good Unemployment numbers completely reversed the picture and helped the stock markets and the US dollar rise.
The mixed messages are likely to continue with the economy performing well but wider concerns about Trump’s action and the possible negative economic consequences of the Trade wars, all weighing on overall sentiment. 2019 started with a wobble and many predicting a global recession or stock market crash is approaching, composure has been regained but could easily falter again.
The US dollar is likely to struggle to hit the highs of 2017 and 2018 with many expecting their economy may have peaked in 2018 and the US Federal Reserve indicating they may gently ease their pace of interest rate hikes.
Tonight is the latest Federal Reserve Minutes from their December meeting which will provide some insight into the decision making of the Fed and provide some commentary to shape market perception.
Sterling should grab many headlines as the crucial Brexit vote approaches next week. Only a positive performance of the Brexit bill through the UK parliament would really help sterling. The other numerous outcomes appear to indicate more sterling weakness and means we should remain below 1.30, with the US dollar continuing to be the stronger currency.
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