19th January 2018 - The Fear of new US governmental shutdown put more pressure on USD

Walid Salah Eldin

Master Trader
Feb 15, 2016
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The fear of watching new US governmental shutdown could dominate the market sentiment by the end of the week weighing down on the greenback and sending the US treasuries yields higher.

The gold rose for trading now near $1335 per ounce, despite the persisting of the risk-on sentiment in the US Equities market in the beginning of today session.

While UST 10yr yield is now at 2.64% the level which has not been seen since 2014, as the governmental shutdown could add to the worries about the US creditability raising the US cost of borrowing higher further.

After it had been already boosted recently by growing concerns about the Chinese funding of the US debt, following the news which came out from China last week to refer to potential scaling back or halting of its purchasing of US debt on recommendation from senior officials.

While the new reflation plans in US are in need for more financing in the coming years amid higher inflation rates and stronger interest rate outlook in US to tackle the prices building up which can send the cost of financing higher.

As the US economic activities are running well now with brighter outlook amid the new taxes overhaul plans which can contribute in raising the inflation upside risks too.



The Federal Reserve Bank of Cleveland President Loretta Mester who voted last month for keeping the interest rate unchanged has said today that hiking the interest rate this year and next year will be appropriate.

Loretta Mester was urging her colleagues to stick to their gradual pace of lifting interest rates and appreciate further the recent weak inflation data but she is looking now more hawkish than before and more confident in the inflation rising to the Fed's 2% medium term target.


The borrowing cost could be boosted in the money markets across the globe recently with growing believing in the global economic recovery which will send the cost borrowing higher and end the extra ordinary adopted easing conditions.

The release China Q4 GDP could add to this odd by showing this week better than expected growth rate by 6.8% yearly to be as the same as the third quarter which the consensus was referring to 6.7% yearly expansion.


Even in Japan 10yr JGB yield rose this week to 0.085% which has not been seen since last July challenging BOJ target of keeping this rate close to zero till reaching its 2% inflation yearly goal.

As BOJ decision on Jan. 9 to lower its purchases of long term bonds could spark speculations of watching closer monetary policy normalization and unwinding its QE ultra easing policy.


Kind Regards

Global Market Strategist of FX-Recommends

Walid Salah El Din