Market News & Insights
30 September 2013

US Government Poised for Partial Shut Down

EUR/USD 1.3506
GBP/USD 1.6151
GBP/EUR 1.1958 (0.8363)
EUR/CHF 1.2229
GBP/CHF 1.4626
GBP/AUD 1.7318

Friday saw a flurry of economic releases for the US. First up, the Core PCE Price Index m/m come out better than expected 0.2% versus 0.1%, followed by personal spending which met analysts’ expectations of 0.3%. Last up was a revised University of Michigan consumer sentiment which saw a drop from the original number of 78.8 to 77.5.
Meanwhile EU, US & Asian stocks retreated and S&P Futures Index slid on the news of a potential US shutdown.
The US Government stands poised for its first partial shutdown in 17 years at midnight tonight, after a weekend with no signs of negotiations or compromise from either the House or Senate to avert it. Both parties say they do not want a shutdown, though neither side are budging from their positions to avoid one. Republicans want to delay President Obama’s flagship Affordable Care Act for a year and make other changes to the health law with Democrats vowing to not let that happen. The shut down if it were to go ahead would mean 800k federal works would be sent home tomorrow if congress fails to pass a stopgap spending bill before funding expires tonight.
The Pound strengthened for a fourth day against euro after an industry report showed UK house prices rose the most in six years this month. Sterling gained versus all except two of its major counterparts before the house pricing data. The pound rose 0.4 percent against the euro after appreciating. Sterling was little changed versus the US Dollar at $1.6145.
Italy faces mounting pressures from the IMF to get their house in order as bond yields fell for a third day after PM Enrico Letta said he would face a confidence vote following Silvio Berlusconi’s withdrawal of support for the nation’s five month old administration.

Today sees a slightly busier than normal Monday by way of economic news, first up in the UK is Net lending to individuals followed by EU CPI Flash Estimates, last up at 2.45 sees Chicago PMI.