U.S. Dollar Boost on the Cards if Senate Votes through Temporary Funding Package
Above: Senate minority leader Chuck Schumer. Image © Senate Democrats, reproduced under CC Licensing conditions.
The Dollar could be due a boost before the week is finished should the U.S. senate vote through either of the two proposals due before them aimed at ending the ongoing government shutdown.
The Senate will vote on Thursday on a pair of bills that could end the month-long partial shutdown of the federal government.
One is a a Republican proposal aimed at securing President Donald Trump’s demand for a $5.7bn wall along the Mexican border in exchange for temporary protections for young undocumented immigrants.
The other, which stands a greater chance of success, is a Democrat proposal, would extend funding for the agencies that are currently closed through to February 08.
"The U.S. Dollar could be boosted if a Democratic proposal to fund the U.S. government for three weeks gets the required 60 votes out of 100 needed to pass the Senate on Thursday," says Robert Howard, an analyst on the Thomson Reuters currency desk.
The Democratic proposal would have to win the support of at least 13 Republicans to reach the 60-vote threshold.
Senate majority leader Mitch McConnell and minority leader Chuck Schumer said on Tuesday that they would bring the bills to the floor, in the first sign of progress after a 32-day stalemate over the partial shutdown, which has left as many as 800,000 government workers without pay.
Schumer says the Democrat proposal "could break us out of the morass we are in".
The Dollar is yet to be materially impacted by the shutdown, with investors betting the economy will quickly catchup on any lost growth as soon as a deal is sorted.
However, with this being the longest shutdown on record, and no apparent end in sight analysts are beginning to wonder how long the economy and the Dollar can defy gravity. If they shutdown goes on too long there risks a point at which some of the lost growth becomes irretrievable.
"Although the record-long partial government shutdown has not hurt the Dollar so far, it has clouded the outlook for consumer-driven U.S. economic growth. Lifting that cloud, even if only temporarily, would help the greenback," says Howard.
Ahead of the votes, the U.S. Dollar index - a broad-based measure of overall Dollar performance - is at 96.29, having opened 2019 at 96.85 but having been as low as 95 on January 09.
The Pound-to-Dollar exchange rate is quoted at 1.3013, its strongest level since November 15. The Euro-to-Dollar exchange rate is at 1.1364, putting it towards the bottom of its 2019 range.
Time to move your money? Get 3-5% more currency than your bank would offer by using the services of foreign exchange specialists at RationalFX. A specialist broker can deliver you an exchange rate closer to the real market rate, thereby saving you substantial quantities of currency. Find out more here.
* Advertisement
