Daily Currency Update

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The US dollar struggles to advance amid the US government shutdown


The US dollar declines 0.27 percent after a partial government shutdown that exacerbated the risk-off mood. Top White House officials failed to strike a deal to give President Trump his $5bn worth of wall funding. More than 400,000 employees are set to work without pay while more than 350,000 were forced to take unpaid leave. The Trump administration warned that the partial government shutdown could stretch into January on Sunday.

President Donald Trump considered firing Fed Chairman Jerome Powell as he became more dissatisfied with the central bank decision to hike rates. Additionally, the government appeared to be in damage control mode when Treasury Secretary Steven Mnuchin quoted Trump as saying, “I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”

US equity futures recovered slightly throughout the overnight trading session after Treasury Secretary Steven Mnuchin is set to meet top bank executives to discuss liquidity.

The Loonie touched new 19-month lows against the Greenback on Friday at 0.7352 (USD/CAD at 1.3602), pushed by the risk off mode in the US equity markets that was influenced by a partial government shutdown in the US. The USDCAD rate this morning is trading without any significant change since last Friday at 1.3597.

The Loonie is also under pressure this morning after banks significantly lowered their predictions for oil prices in 2019, as crude markets remained under firm pressure amid worries over weakening demand and signs of a burgeoning global supply glut.

The Euro is bouncing 0.40 percent ahead of Christmas break, trading at 1.1415. There are no eurozone or US indicators so the markets are likely to be subdued as we head into Christmas.

The GBP/USD pair is bouncing 0.51 percent as it trades at 1.2689. Support is seen at the 1.2662 level. The Pound strengthens on worries of the extended US government shutdown.

After losing almost 200 pips last week, the AUD/USD pair performed a modest recovery in the early trading hours of the new week and advanced to 0.7070 before losing its momentum. At US market open, the pair is up 0.29 percent on the day at 0.7051.

The NZD/USD pair inched higher against the US Dollar on Monday. The technical bias is bearish, but the bounce was due to worries of the extended US government shutdown.