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US Open Preview– Dollar pressured as government shutdown weighs; European stocks flat
January 22, 2018 1:26 pmVideo
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Here are the latest developments in global markets:
Day ahead: US spending bill vote awaited; German political developments in focus
Economic releases will be out of the spotlight on Monday as political developments are gathering attention after the US government shut down on Friday midnight, with the US Republicans and Democrats Senators being unable to reach a temporary agreement on a spending bill during the weekend due to disputes on migration issues. Investors are now waiting for the Senate to resume the vote today at 1700 GMT, meaning that a majority of government services will not open. Republicans are currently holding 51 votes out of the 60 needed in the 100-member chamber, therefore they would need some support from Democrats to pass the budget.
In the Eurozone, though, uncertainty in the political front has narrowed following news that Social Democrats (SPD) backed to start formal coalition talks with Merkel’s conservatives (CDU). The leaders of the two parties are scheduled to meet on Monday, while full talks are expected to begin as early as Tuesday. A deal on a grand coalition would avoid fresh elections and, hence, allow Chancellor Merkel to run the government for the fourth consecutive term.
Wholesale trade data due at 1330 GMT will be in focus in Canada, with analysts anticipating the measure to slow down in November. However, the figures are expected to have a moderate impact on the loonie.
In stock markets, several bank corporations are expected to deliver reports on earnings today. Netflix will also release its quarterly results on Monday.
Regarding public appearances, the ECB chief, Mario Draghi, and the executive member Benoit Coeure will be participating at the Eurogroup’s meeting in Brussels today.
In Switzerland, global/major businesses and government heads will meet for the 48th World Economic Forum annual meeting in Davos over the next five days. The US President, Donald Trump, is also expected to attend the event for the first time since he took the presidency.
Early on Tuesday, the BOJ will decide on interest rates. Forecasts are for policymakers to maintain rates at -0.1% as inflation continues to undershoot the BOJ target of 2.0%. However, investors will keep a close eye to see whether the central bank will change its stance on QE after it reduced its long-dated bond purchases last week.
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