Capitol Hill and the USD in Focus, as the SDP saves the day for the EUR

Earlier in the Day:

With no material stats released through the Asian session this morning, the markets were focused on political events, with the failure of the Senate to reach a vote in favour of extending government funding through to next month one the main events of the weekend.

With talks being extended through to Sunday and the Senate adjourning until Monday, where a 2^nd vote is expected to pass, there was little impact on the markets through the Asian session.

Previous shutdowns have been relatively short lived and with muted impact on the U.S and, more importantly, the global economy and the financial markets have generally been unscathed.

At the time of writing, the Yen was down 0.03% to ¥110.8 against the Dollar, with the Aussie Dollar down 0.06% to $0.7990, while the Kiwi Dollar was up 0.03% to $0.7279.

It was a mixed bag in the equity markets, with the Nikkei down 0.19% and the Hang Seng down 0.04%, while the ASX200 had a choppy day, down 0.18% at the time of writing. The CSI300 bucked the trend, up 0.75%, finding continued support off the back of last week’s GDP and industrial production figures.

The Day Ahead:

There are no material stats scheduled for release out of the Eurozone this morning to provide direction for the EUR, with the markets focused on Germany and the SDP’s weekend vote to move ahead on coalition talks with Merkel’s CDU Party.

The vote on Sunday was certainly an important one for Merkel’s career and the EUR, with Merkel a key political figure within the region.

At the time of writing, the EUR was up 0.01% to $1.2223, with a pickup in Dollar strength pinning back any EUR rally, though the real drama for the EUR will be on Thursday, where Draghi may look to sledge the EUR to bring it down a peg or two.

For the Pound, it’s another quiet day on the macroeconomic data front, which leaves focus on the UK government and Brexit. With the House of Commons having already passed the EU Withdrawal Bill, the House of Lords are expected to vote this week and talks of bringing an end to the House of Lords will likely resurface in order to keep any dissent at bay.

Any negative chatter on the Bill will likely weigh on the Pound, with Merkel soon to be free from the domestic political drama to focus on the EU and Brexit, which will unlikely be a positive for the Pound. Spain and the Netherlands have looked to take a softer approach on Brexit, but following the latest election, Merkel will likely take a harder stance to regain popularity and Macron may well go down Merkel’s path.

At the time of writing, the Pound was up 0.03% to $1.3862.

Across the Pond, focus will be on the Senate and this evening’s vote on extending government funding through to the second week of February. While the markets are less than impressed with the inability of a Republican House and Senate to be able to agree on terms for an extension, the Dollar will likely be the only victim of another failed vote.

At the time of writing, the Dollar Spot Index was up 0.1% to 90.667 and with no material stats scheduled for release today, the Senate vote will be the key driver.

For the Loonie, November Wholesale Sales is in focus, with sales growth forecasted to slow, which will be a negative for the Loonie, though the any impact with be short lived, with market focus being on NAFTA talks, which kicked off on Sunday.