USD suffers due to US Government shutdown

1 October, 2013

Tom Arnold

This morning we find ourselves coming to terms with the US government’s failure to agree an extension to their debt ceiling deadline, and the resultant partial shutdown of government services in the US for the first time in 17 years. The US Dollar has been struggling recently anyway, after policy makers talked down the US economy, it’s recovery and the chances of an end to stimulus measures, and this massive news is the last thing it needed. Rates for buying Dollars and the pegged currencies such as UAE Dirhams have risen significantly and for those of you buying Dollars from Sterling we are currently sat at 9 month highs. Talks will continue to try and resolve the Democrat/Republican divide on the debt ceiling and significantly the so called Obamacare bill, and with the pressure of a public being given limited government services and many government employees now not earning until things are resolved, it would be surprising if an agreement is not reached fairly soon. In the mean time it is well worth considering a forward contract for your upcoming Dollar purchase to make sure you take advantage of these long term highs. In other news we have German Unemployment and UK and European Manufacturing PMI figures this morning, followed by US Manufacturing PMI this afternoon. While markets are likely to be firmly fixed on the US problems for now, significant moves in these data releases could still have an impact on their local currencies, so do keep in touch with your CI account manager to be kept informed on how the markets are affecting your decision to send money overseas.