Politicians May Have Found Way to Avoid U.S. Government Shutdown
In late breaking news, CNBC is reporting that Congressional negotiators said they reached a tentative deal Monday to fund the government and avoid another shutdown. The news is putting some pressure on the U.S. Dollar, while underpinning U.S. stock index futures early in the pre-market session. The announcement of the pending deal came only minutes before President Trump took the rally stage in the Texas border city of El Paso, where he was expected to try to drum up support for his proposed wall.
Republicans and Democrats Find Common Ground
According to the report, the top four congressional appropriators, led by Senator Richard Shelby, R-Ala., and Representative Nita Lowey, D-N.Y., emerged from a meeting on border security funding Monday night and announced an agreement in principle to fund the government past a midnight Friday deadline.
The parties involved in the negotiations did not immediately give details of the deal or say when they would release bill text. However, a congressional source told CNBC it would put about $1.4 billion toward physical barriers, but not a wall. It would include about 55 new miles of bollard fencing. The agreement would also reduce the cap for Immigration and Customs Enforcement detention beds by about 17 percent from the current 49,057 to 40,520, according to the source.
A Deal Still Needs President Trump’s Support
The early price action in the financial markets suggests investors are being cautiously optimistic about the deal getting completed in a timely manner. Furthermore, the measure’s passage depends on Trump’s support.
The question remains which President Trump will emerge in the wake of the new proposal. In December, Trump took a hardline approach, threatening to veto any plan that did not include $5.7 billion to build his proposed border wall. However, lately, Trump has appeared more willing to accept a deal that does not include that full sum.
Deadline Approaching
A bill could get unveiled late Tuesday or early Wednesday. But that timing could change. Traders are likely to show more conviction once the bill is passed. This because just a few days ago, lawmakers on a conference committee trying to hash out a funding deal showed doubts about striking a deal to prevent a shutdown. Furthermore, a few of the skeptics are calling Monday’s move a last-ditch effort to get talks back on track.
Market Impact
Avoiding another government shutdown should be positive for stocks and negative for the U.S. Dollar. The news would be a positive for U.S. economic growth which should underpin stock prices. During the recent 35-day partial closure, U.S. industry suffered losses, especially the airlines sector. U.S. GDP growth was also negatively affected. The dollar could weaken because hedgers would be encouraged to reduce some of their safe-haven positions.
This article was originally posted on FX Empire
More From FXEMPIRE:
Asian Investors More Optimistic About Trade Deal as U.S. Markets Finish Mixed
Natural Gas Price Forecast – natural gas markets attempt to break out
EUR/USD Price Forecast – EUR/USD Consolidates Near Overnight Lows
USD/JPY Fundamental Daily Forecast – Safe-Haven Appeal, Higher Yields Make Dollar Attractive Asset
AUD/USD and NZD/USD Fundamental Daily Forecast – Kiwi Pressured Ahead of RBNZ Decisions