22 Jan: US Government in lock-down. German SDP agree to coalition talks with Merkel. US$ opening weaker.

By | January 22, 2018

 

Friday was a generally choppy session as the market waited to see if the US was heading for a Government shutdown, with the dollar recovering a little from the day’s lows amid reports that president Donald Trump had invited Senate minority leader Chuck Schumer to work out a deal to avoid a government shutdown. The main interest was in Cable, which was heavy after a seesaw ride following the release of the UK Retail Sales, which missed expectations by a wide degree (-1.5%mm v exp of -0.6%, +1.4%yy v exp of +3%). Having made a new post Brexit high against the US$(1.3944), Cable then remained under pressure for the rest of the day. In other markets, US stocks made their customary all time high, completely ignoring the potential Government shutdown, while the metals were choppy and WTI a little heavy, but firmly within its recent uptrend.

It will be a busy week ahead although Monday and Tuesday won’t have too much to go on, with little due today and the German/EU ZEW Economic Sentiment Survey being the highlight tomorrow. Things will start to get busier on Wednesday with the release of the global flash PMIs, and then on Thursday the ECB meeting will take place, with most of the focus likely to be on Mario Draghi’s Press Conference as no change to policy is expected. Friday will wind up the week with the Q4 Preliminary GDP figure and the latest Durable Goods Orders. Have a good week.

NB

Following the weekend shutdown of the US Government the US dollar is opening slightly weaker in very early NZ trade.  This has formed a minor chart gap against most pairs, and for the time being it is difficult to see the dollar regaining much ground.

Donald Trump has said on Sunday that if the government shutdown stalemate continues, Republicans should fund the government by changing the Senate rules although top Republicans immediately rejected that idea. The Senate will vote at 1 a.m. EST (0600 GMT) on Monday on a bill to fund the government through until 8 Feb unless Democrats agree to hold it sooner.

In Germany, the Social Democrat Party (SPD) has voted for coalition talks with Angela Merkel’s Christian Democratic Union (CDU), helping the Euro to gap higher at the Monday open. The SPD voted on Sunday, giving a lukewarm endorsement for a renewed Angela Merkel-led “grand coalition”, moving one step closer to a stable government after months of political deadlock. The SPD voted by 362 to 279, with one abstention, to press ahead with negotiations.

CURRENCIES
EURUSD: 1.2218
Res  1.2250  1.2275  1.2295
Sup  1.2200  1.2165  1.2140
USDJPY: 110.80
Res  111.00  111.30  111.50
Sup  110.50  110.20  109.90
GBPUSD: 1.3851
Res  1.3880  1.3910  1.3945
Sup  1.3835  1.3805  1.3775
USDCHF: 0.9638
Res  0.9650  0.9665  0.9700
Sup  0.9610  0.9575  0.9535
AUDUSD: 0.7983
Res  0.8000  0.8035  0.8065
Sup  0.7970  0.7940  0.7905
NZDUSD: 0.7272
Res  0.7300  0.7330  0.7355
Sup  0.7260  0.7235  0.7215
INDICES / COMMODITIES
S&P: 2813
Res  2815  2820  2825
Sup  2810  2805  2800
DJI: 26060
Res  26090  26145  26200
Sup  25980  25925  25870
ASX SPI: 5978
Res  5985  6000  6015
Sup  5965  5950  5935
XAUUSD: 1331
Res  1340  1335  1345
Sup  1325  1320  1315
XAGUSD: 17.00
Res  17.10  17.20  17.35
Sup  16.90  16.80  16.70
WTI: 63.45
Res  63.95  64.25  64.85
Sup  63.10  62.75  62.20