020 7898 0500The US dollar was rocked this week as news broke that the US government has been partially shut down for the first time in 17 years because a deal could not be struck on next year’s budget. As many as 800,000 federal employees were sent home without pay as the US edges ever closer to running out of money. The resolution needed is a temporary budget before 17th October, when the debt ceiling would have to be raised or the US government will run out of money and in turn will default on its debt for the first time in history. The shutdown was reported to be harming the growth of the country by $300 million a day, dampening hopes that the Federal Reserve will commence tapering its quantitative easing program in the near term. Data released this week did little to inspire confidence as the ADP non-farm employment change came in short of expectations whist the services PMI data disappointed. The manufacturing PMI and unemployment claims painted a slightly rosier picture, but, going forwards, dollar movements will be dominated by news surrounding the US budget resolution – or lack thereof. Normally today would bring the highly influential Non-farm payrolls figure (a key piece of data which would help the Federal Reserve decide if the labour market had improved enough to consider tapering); however, the data will not be released due to the government shutdown. As such, the main focus outside the budget situation will be the speeches from two members of the Federal Open Market Committee. Get in touch with your trader now, as the dollar finishes a gloomy week with little light on the horizon.
