It’s official! The U.S. government has shut down, as lawmakers failed to come up with a deal. Quite a surprise, really, especially since they’re notorious for coming up with a plan on the last minute.
Anyway, what are your longer-term biases and trades from now on? No more taper for the rest of the year, you think?
Good news for anyone shorting the USD today! Bagged a few pips on the EURUSD. Might set a precedent, at least for the next few years?
The shutdown won’t make Fed tapering any more likely, and probably will make it less likely — maybe [I]much[/I] less likely.
Some individuals will be hurt by this foolishness, but I expect that the overall economy will come through it unscathed. Which is not to say that various markets won’t have hissy-fits in the meantime.
Today, the U.S. stock market traded lower in [I]anticipation[/I] of a shutdown. But, the stock market is easily spooked by anything that can be labeled “uncertainty”. Aren’t we all a little tired of hearing that “the stock market hates uncertainty”?
Gold blipped a little higher this morning, but it was nothing to write home about.
My guess is that currencies will be unaffected by this shutdown. The markets have seen this movie before.
Two-and-a -half years ago, somebody started a discussion in the Newbie Island forum, similar to this discussion. (The big difference between then and now, of course, is that the government didn’t shut down in 2011.)
At that time, I posted a daily chart of EUR/USD covering the period of [I]the 1995 and 1996 government shutdowns,[/I] and challenged that person to spot the reaction of the EUR/USD to those shutdowns. Here’s a link to that post — 301 Moved Permanently
Friday of this week might be interesting. If the shutdown continues throughout this week, one of the things the government won’t be doing is issuing the NFP report on Friday, October 4. So, will the currency markets just behave as if it were any old ordinary Friday? Or, will rumors about what’s in the delayed report make the markets volatile? I have no basis for an opinion.
If this bit of political theater succeeds in crippling the [I]Obaminable Care Act[/I] (which is the issue behind this scuffle), then the shutdown will have been worth it, however long it takes.
But does this comparisson fit in today’s markets? I mean, that was more than 15 years ago and there is way more people trading fx now, not to mention the internet allowing every single person who wants to do so with a lot of ease, unlike in 1996.
I disagree that the currency markets will behave normally, I think the USD will drop value, specially against the EUR.
tl;dr: bully EUR/USD
Shouldn’t the US Dollar increase in value since the treasury department is shut down and the US is no longer printing money (at least temporarily)? Less us dollars on the market = increased value?
I don’t think the US Treasury prints money. That would be the Fed correct? The US treasury issues bonds I think, which would be bad if they stopped doing that too. No bonds to buy, by the Fed, means no money for the government to run. But then again, the government shut down, so does it really matter?
Things that are considered essential are not included in the shut down.
There will be no less us dollars on the market because of the shut down.
The way I see it; Political instability translates into economical instability.
The dollar seems to be drawing support from traders pricing in expectations that the shutdown won’t last very long. Plus the fact that this is likely to keep Fed stimulus in place… More stimulus, good for the economy, good for the dollar? Or am I missing something here?