US government shutdown:EUR/USD – Dollar Under Pressure As US Government Shuts Down

EUR/USD – Dollar Under Pressure As US Government Shuts Down:

EUR/USD has posted slight gains in Tuesday trading. Earlier in the day, the pair rose above 1.3570, a level not seen since February. The dollar is under pressure as the US government has shut down non-essential services, as Congress failed to resolve the budget deadlock. In economic news, Spanish and Italian PMIs missed their estimates. German Unemployment Change disappointed, coming in way above the estimate, while the Eurozone Unemployment Rate edged lower. Over in the US, today’s key event is ISM Manufacturing PMI. The index has looked strong in recent releases and little change is expected in the September release.

With Congress failing to reach an agreement on the budget before October 1, the US government has now shut down non-essential services. This last happened in 1996, and politicians on both sides of the divide will be trying to hammer out a compromise to end the crisis. Both sides seem entrenched in their positions. Republicans want to defend Obama-care before they approve a budget, and the Democrats are determined to protect their health care bill. If things are resolved sometime this week, it will have been more of a nuisance than a crisis. However, a much more serious crisis could occur in two weeks if Congress doesn’t reach an agreement on raising the debt ceiling. If that happens, the Treasury would be unable to pay all of its bills, and the economic fallout could be tremendous.

USD/CAD – Steady as US Shutdown Starts:

USD/CAD is steady in Tuesday trading. Early in the North American session, the pair is trading slightly above the 1.03 line. The US government shutdown has started, as Congress was unable to reach an agreement over the budget. Today’s key release out of the US is ISM Manufacturing PMI. Canada has just one release today – a speech by BOC Senior Deputy Governor Tiff Macklem at an event in Toronto.