US Government Shutdown
In the past 50 years the US Government has shut down 21 times the longest of which was in 2018 which was for 5 weeks – and that to remind you was during Trump 1. Why might this time be different? This time POTUS has stated his determination to take the opportunity to slash jobs in the US Government sector, and as ever, he is more willing to pursue brinksmanship when it comes to doing deals – or not. That makes it less likely that the Democrats and Republicans will hammer out a mutually acceptable formula to approve the budget quickly. Most immediately the shutdown meant that the Bureau of Labour Statistics or BLS was unable to deliver its monthly labour market report on Friday, which given the Federal Reserve’s focus on the health of the employment market means that the market is flying, if not blind certainly, without a key indicator. Normally, short US Government shut downs have little effect on the US economy but with the market assuming at this point that there will be a swift solution, the consequences and the economic impact of that assumption not coming to fruition could be more severe than currently priced in and therefore negative for the USD.
EUR/USD 1.1742.
Asahi Dry
Five days in and the cyber attack on Asahi Breweries has not been fixed. The shares of the Japanese brewer are down 1% but expect that to increase if the Asahi IT department fail to sort it out sharpish. More concerningly for fans of the beer, disrupted supplies mean that taps are running dry and tins and bottles are disappearing fast.
EUR/JPY 173.19.