Beware Profit Taking And Political Deadlines

 As the week draws to a close, politics is in central focus. 

there are two big deadlines looming  -a potential U.S. government shutdown if a funding bill is not passed by Friday and a vote by the social democrats in. Germany to begin talk with Angela Merkel on a grand coalition this weekend. with the clock ticking, the U.S. dollar and euro could come under selling pressure as investors take profits or cut their long positions ahead of these key event- risky.

if members of congress fail to a reach a deal or the SPD votes against the board Thursday on the back of sen. McConnell's warning to plan for a shutdown, with some eleventh-hour scrambling, we  still believe the GOP will secure enough votes to keep the government running and if we're right,it should because right now, investors still think that's unlikely. 

Softer U.S. data

compounded the dollar's losses with housing starts and building permits falling. The Philadelphia manufacturing index also dropped to 22.2 from 26.2 jobless claims hit a record low but this time of the year due to seasonal hiring.

because claims can be very volatile this time of the year due to seasonal hiring. The University of Michigan's consumer sentiment index is the Washington will be the primary focus.

The Australian and new Zealand dollar extended their gains on the back of stronger than expected GDP data

year over year growth held steady at 6.8%, against expections for a decline but on a quarterly basis growth slowed to 1.6% from 1.8%. Retail sales were also weaker but industrial production growth accelerated. Investors braced for uniformaly weak data so the modest surprice helped take AUS/USD above 80 cents and NZD/USD above 73 cents. They also found Australian labor data satisfactory as job growth came in two times greater than expected. This improvement  helped to offset the rise there was a more even mix of full and part time jobs.

Although there was a more even mix of full and part time work, the latest report reinforces the labor market's positive direction. /the New Zealand dollar continued to power higher ahead of Thursday's business PMI report. it will be intresting to see if the recent strength of NZD affected sentiment. USD/CAD tried to make a run for 1.25 but ended the day much closer to 1.24. The pair should remain under pressure following the Bank of Canada’s rate hike and its optimistic outlook for Canada’s economy.

Meanwhile, sterling comes back into focus on Friday with U.k. retail sales scheduled for release. We haven't seen a pullback in streling in 6 trading days and if spending beats expectations GBP/USD will most certainly Brexit provided no new headlines with MPs approving the key European 

Union (withdrawal) Bill by 29 votes, a win for Prime minister May. 

Although economists are looking  for spending to decline at the end of the year according to the british Retail Consortium, spending growth has held steady. With the bar so low, the data could beat

in monday's mid-year budget update, Treasurer scott morrison said thr deficit for the year to june 2018 was now likely to be around A$29.4 billion (s$24.36) bilion). that was down from A$ 29.4 billion predicated in the may budget and amount to 1.3 per cent of Australia's annual gross domestic product (GDP).