The US federal government shutdown has now dragged on for seven days and as investors and the markets reassess their expectations that the close down would be a short term thing they have turned to the safe haven currencies such as the Japanese Yen and Swiss Franc.
Fears that the shutdown is beginning to impact the world’s largest economy were bolstered over the weekend after US Commerce Secretary Penny Pritzker warned that business in the country are beginning to suffer from the shutdown.
“The shutdown is not good for business. It’s not good for the economy,” Ms Pritzker said. One consequence of the shutdown had been her department’s inability to collate vital economic data. We’re a huge source of data for American business and that is a problem… It’s affecting businesses and it’s affecting their ability to get data,” she said. The latest key jobs data was postponed for publication last week as a result of the cuts.
The lack of data caused the markets to raise their bets that the Federal Reserve will delay tapering its monetary easing programme this month.
Concerns were also increased that the USA could default on its debts as the October 17th deadline draws ever nearer without any sign of a deal being struck between the bickering Republican and Democrat parties.
John Boehner, the House Speaker said that the nation will default unless President Barack Obama agrees to negotiate over spending cuts, something that the President and the Democrats have flatly refused to do.
The US Dollar is likely to remain under heavy pressure until a deal is struck.
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