FX News – October 1: USD Falters on Government Shutdown

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It's just the first day of October and a lot has happened already during the Asian session. The US has partially shutdown its government after failing to reach an agreement on the health care law proposed by US President Barack Obama. This is expected to produce a negative impact on the US economy, and the US Labor Department is unlikely to release unemployment data at the end of this week due to this.

Meanwhile in other news, Japan announced that it would raise its sales tax from 5% to 8% due in April 2014, and the Reserve Bank of Australia maintained rates at 2.5%. Now let's see how some currencies were affected by these events.

Starting with the AUD/USD, the pair rallied from a low 0.9340 to above the 0.9415 zone after the RBA announcement. The pair is now trading at 0.9420 with no signs of a drop anytime soon.

Initial resistance for the AUD/USD pair is at 0.9376, followed by 0.9399. Meanwhile, initial support is at 0.9299, followed by 0.9276.

As for the USD/JPY, the pair made a quick spike just below the 98.70 zone during the Asian session, but has since dropped due to the yen's strength against the greenback. The pair is now trading at 97.97, with initial resistance seen at 98.86, followed by 99.11. Meanwhile, initial support for the pair is at 97.87, followed by 97,63.

The European session is just opening, but already the EUR/USD pair rallied at the 1.3580 zone. It hasn't been at this level since February this year.

The EUR/USD pair is currently trading at 1.3573, with initial resistance seen at 1.3582, followed by 1.3615. Meanwhile, initial support is at 1.3501, followed by 1.3468.

Expect more volatility in the coming hours as several EU countries will release employment figures and the UK will release its Manufacturing PMI.

By FX Strategy Team, Published on 1st of October 2013
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