The republicans and the democrats are engaged in the fierce struggle. Due to sharp and abrupt reduce in the funding, about 800,000 of 2.1 million federal employees will be furloughed. There are rumors that the “blackout” will last no more than a week and a rational decision will be taken. The investors started to buy shares in advance which are cheaper now; S&P 500 added 0.8%.
What is reason of the current events? We suppose that there is struggle for the Fed’s chairman office. The democrats (Obama) would like to assign former US Treasury secretary Timothy Geithner; however, the republicans want to see at this office Janet Yellen. Having won when Larry Summers quitted the republicans won the first round and White House is in serious condition. It this assumption is correct then there is no economic compounding in the current situation, which calms the investors. There is little time to wait.
Today at 15:45 UTC+4 ECB Interest Rate Announcement is due; no changes are expected. At 16:30 UTC+4 Mario Draghi speaks. At 16:15 UTC+4 data on ADP Non-Farm Employment Change in September; forecast 177K vs. 176K in August. At 23:30 UTC+4 Ben S. Bernanke speaks.
We expect further decline of the euro to the first target range 1.3465/76 formed on the 4H by two trend lines. After passing of this support area, the second target opens 1.3400/11 formed by the high of August 8 and the high of August 23, as well as support of trend lone on the daily chart.
