The longest shutdown in history

4 minute read


At a fundamental level not a lot changed for the USD on Friday. The government remained partially shutdown, with hundreds of thousands of employees receiving no pay. The president back away from using emergency funds to pay for his Wall, resisting encouragement from his own party to provide a temporary fix. US economic data were limited to consumer price index figures, which showed headline inflation slowing from 2.2% to 1.9% while core inflation - excluding food and energy - was steady at 2.2%.  

Shortly after the inflation data the USD popped higher. The data were not enough to have sparked the move and it looked as though technical factors were at work.  


The EUR did its best to maintain a low economic profile on Friday but the figures this morning for euro zone industrial production were even bleaker than analysts had predicted. Output was down by 1.7% in November, leaving it 3.3% lower on the year.

Another concern is Greece, where the prime minister faces a vote of confidence after losing his slender parliamentary majority. Panos Kammenos, the leader of Mr Tsipras's nationalist coalition partner, took objection when the PM allowed Greece's northern neighbour to name itself "Republic of North Macedonia". Mr Kammenos believes that Greece has the sole right to the name Macedonia, which is the title of one of the Greek administrative divisions. The situation could lead to an early general election. That would not of itself necessarily be a bad thing but it would represent another uncertainty in a troubled region. The EUR is 0.5% lower on the day.


After a good run earlier in the week the CAD ran out of steam on Friday. There were no Canadian ecostats to trouble the Loonie but a 5% decline in oil prices was quite enough to do the damage. The CAD's net loss for the day was 0.7%.

Despite Friday's setback the CAD had a positive week. It starts today 0.7% above its level last Monday morning.


Sterling had a terrific day, strengthening by an average of 1.1% against the other ten most actively-traded currencies and by 0.6% against the USD. Its good fortune was entirely the result of another development in the Brexit narrative. A newspaper reported that "senior cabinet ministers" believe Britain's departure from the EU will have to be postponed, whatever the result of tomorrow's vote in Parliament. Meanwhile the prime minister has adjusted her mantra about "my deal or no deal". In its latest iteration the line is "my deal or no Brexit". Investors quite like that idea, especially as everyone expected tomorrow's bill to go down.

There are no UK economic statistics on the agenda for today or tomorrow. All that matters is the Commons vote on the EU withdrawal bill, and what comes next.


Friday was a choppy day for the JPY and there was more choppiness in the Far East this morning. None of it related to Japan itself; it was the result of vacillating risk sentiment, especially in the wake of this morning's data from China. China's exports were 4.4% lower in November than for the same month in 2017 and import were down by 7.6%. The numbers were a worrying sign for the global economy.

After dropping back in New York on Friday the yen recovered early today. It is a net 0.2% higher against the USD. The Tokyo market is on vacation today.

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