Although most currency pairs have remained within the range of the previous session, the US$ remains under pressure on Friday amid concerns of a possible U.S. government shutdown, with lawmakers struggling to put together a federal budget deal. If an agreement to fund government operations is not reached by today, it would compound an already-negative climate for the dollar and keep it under pressure heading into next week. Other markets have also been mostly rangebound today, with stocks just under their highs (the DJI did make a new high but is closing a little lower), and the metals and WTI trading slightly heavy into the end of the day. US bond yields have squeezed higher, with the 10 years now trading at 2.62%, last seen in March 2017 and should provide some support for the dollar if they continue to climb.
Friday has a pretty thin calendar and events seem likely to be driven by risk-sentiment on the back of the US Budget vote, political headlines and bond yield movements. The NZ Business PMI will be the highlight in Asia, while Europe will look to the German PPI, the EU Current Account and the UK Retail Sales (exp 0.3%mm, 2.1%yy) for guidance. The US will also have little to go on, with just the Michigan Consumer Sentiment Index (exp 97.0) to offer any guidance. Note that In the EU, all eyes will be on Germany over the weekend when the Social Democrats (SPD) are expected to vote on the coalition with Chancellor Angela Merkel’s CDU/CSU, on Sunday, and may make for a volatile opening on Monday in Asia, depending on the result. Have a good weekend.
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