Politicians talk but no Action

Politicians talk but no Action

Politicians2

Political wrangling is again weighing on currency markets this morning as the spectra of the first partial shutdown in 17 years for the US government raises its ugly head at midnight tonight.Any signs of compromise or negotiations were strangely conspicuous from both the house and the senate.

Both sides seem firmly entrenched in their positions whilst making the right noises.This raises some considerable doubt as to whether Non Farms Payrolls figures will get released this Friday and also the knock on effect of GDP for the last quarter.Europe meanwhile has its own problems as Enrico Letta in Italy announced that his government faces a no confidence vote on Wednesday raising the possibility of another debt crisis in Europe.

Predictably broad based USD sales were seen across G10 on Friday with USD YEN and cable seeming to take the brunt.Cable seems to be well supported on this news with another month end upon us and GBP still trading well across the board.

Seasonal factors are expected to keep sterling underpinned today – with both ECB and WMR fixes touted as being sterling supportive – but the market is long and, by the end of the day, it will be interesting to see where we end up.USD YEN has broken some big levels on the downside and with rumors of barriers from 97.50 all the way down to 96.00 these could come into play if we get any more negative headlines from stateside.

With Eurozone headlines from Italy also coming into play perhaps short EUR/YEN as risk aversion takes precedence is the way forward.Either way a week is a long time in politics and month end trends are usually not worth the paper they are written on but for now watch this space for further downside headlines .

About Hetal Patel - Chief Editor, Europe

Hetal Patel has written 58 post in this blog.

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