Source: Forex News
This week, the government
shutdown in the United States continued for the third week. It has now become
the longest shutdown ever and there doesn’t seem to be a way forward. The
shutdown is mostly because of the United States president who has said he will
not sign any funding package without his border wall. The wall was his biggest
campaign promise. Congress on the other hand has said it will not pass any bill
that has a wall in it. This combination means that the shutdown could continue
for a longer period. This week, in negotiations with congressional leaders, the
president walked out after they asked him to reopen the government without the
wall. Ultimately, the wall will likely be funded if the president agrees to a
so-called comprehensive immigration reforms.
Crude oil was a big winner this
week as the rally started this year continued. The rally happened as traders
grew increasingly confident that a deal between US and China will help increase
demand. It also happened as Saudi Arabia pledged to continue reducing the
amount of oil production. This was in line with the meeting that happened in
Austria in December. Saudi has said that it is comfortable with the prices at
above $80 a barrel. With Brent trading at almost $60, there is a likelihood
that the price has more upside to go.
Trade talks between the United
States and China advanced. This is after senior trade negotiators from the
United States travelled to Beijing for the talks. While details for the talks
are scant, investors are optimistic that a deal will be made. In the US, media
reported that Trump was desperate for a deal, which will help push the price of
stocks higher. China too wants a deal so that it can maintain its growth. As a
result, world markets gained sharply.
The Federal Reserve was also in
spotlight this week as it released the minutes of the past meeting. The minutes
showed that while officials were confident about the economy, they remained
ready to adjust the policy depending on the economic data. As you recall, the
Fed has been under a lot of pressure from the Trump administration against
In Venezuela, Nicholas Maduro was
sworn in for his second six-year term yesterday. The swearing-in ceremony, was
shunned by most leaders, who view his presidency as a sham. The country, which
has the biggest oil reserves in the world has faced international condemnation
and sanctions after the previous election.
In the United States, while
stocks had a great week, the sentiment was brought down yesterday after Macy’s
lowered its guidance. This was a major blow to investors, who were banking on a
revival of the retail industry. The industry has faced multiple challenges as
e-commerce has grown. Amazon has been a major beneficiary in all this
especially with its Amazon Prime product. Retail is an important industry in
the US because of the number of people it employs directly and indirectly.
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