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Dollar Recovered On Muted Response To Government Shutdown

ByActionForex
Published 10/02/2013, 04:01 AM
Updated 03/09/2019, 08:30 AM

While the US government started its first partial shutdown in 17 years, the DOW reversed initial weakness to close higher by 62 pts. The dollar also recovered after hitting an 8 month low against the euro, as well as versus other major currencies. Investors seemed not too worried about the impact of the shutdown, which put as many as 800k federal workers on no pay leave and could cost at least $300m a day in output. Nonetheless, it should be noted again that the CBO has already stated clearly that the measures to avoid exceeding the debt limit will be exhausted on October 17. And the government will run out of can between October 21 and 31.

Focus will turn to the eurozone for today. ECB is widely expected to keep rates unchanged at 0.50%. Recent comments from president Draghi suggested that he's concerned with tightening in money market conditions. And he also mentioned the possibility of another LTRO. But it's believed that Draghi will hold off additional liquidity injection before Fed starts to taper its own asset purchase program. Before that the euro will likely remain supported. Meanwhile, Italian prime minister Letta will be tested by a confidence vote today after former prime minister Berlusconi's party withdrew his support to the coalition.

In Asian session today, Aussie was pressured by disappointing economic data. Building approvals dropped sharply by -4.7% mom in August. Trade deficit also unexpectedly widened to AUD -0.82b in August. Japan monetary base rose 46.1% yoy in September. UK will release PMI construction while eurozone will release PPI today. From US, ADP employment will be a main focus and is expected to show 177k growth in September.

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