Friday, 8 Apr 2011

US Government Shutdown Likely

The euro continued to move higher in New York trading as the US Federal Government may shut down this weekend over the budget impasse.

Unless a deal is struck in the late hours, the US government looks to shut down as Democrats and Republicans cannot agree on a 2011 fiscal budget. While much of the drama played out is showmanship that could have an impact next year in the Presidential election, the event is a non-factor that takes up a significant amount of air ways and print in the forex blogs.

In a relatively quiet New York trading session, US wholesale inventories rose 1.0% on expectations of 1.1%. Canadian housing starts were also stronger at 189K with forecasts for 180K.

For the third time in the past four weeks the EUR/USD will close on its weekly high, indicating momentum is behind the move higher. The EUR/USD is up at 1.4440 from 1.4391.

The yen was stronger today as traders have taken profit on short yen positions. The USD/JPY is at 84.80 from 85.12. The EUR/JPY is even at 122.50.

Equities sold off late in the session as S&P 500 was down 0.6%. Crude oil was higher at $112.60 from $111.00.