Markets have started this week on a positive note. Brent crude prices rose above $79 per barrel. According to U.S. Bureau of Safety and Environmental Enforcement (BSEE) the complete recovery of crude production in the Gulf of Mexico would be possible over the next year, creating an additional deficit of crude in the market.
American and European markets are starting this week on the upside. The elections in Germany closed with a victory of German Social Democratic Party (SPD) that has won most of the seats in the country’s federal elections this Sunday by receiving 25.7% of the votes and beating Christian Democratic Union (CDU), conservative party of outgoing Chancellor Angela Merkel with its 24.1%. However, the investors’ community is still dizzied by the possible government shutdown and the looming of a debt ceiling as the U.S. congress has to pass the appropriations bill by September 30.
The U.S. debt is at a record high as it heads to over $29 trillion. Congress may limit the debt ceiling and therefore provoking a government shutdown. The U.S. Treasury Secretary Janet Yellen has warned policymakers that the government would run out of money in October if Congress does not allow for new borrowing.
Logically, nobody wants a technical default of the United States, so with all this clamor around this situation, Congress has no other way to approve the appropriations bill. The Senate may vote on this bill at the end of this week or at the beginning of next week. Nevertheless, the very fact that this process is being delaying may cause sell-off in the American market as investors are scared by the uncertainty and may seek a hedge position in advance.
The nearest resistance for the Dow Jones index is at the 34900-35000 area and for the S&P 500 broad market index – at 4470-4480. We may see sell-offs close to these levels.
The Greenback remains stable as the U.S. Dollar index is trading at its September highs. If the U.S. dollar index would climb above 93.53-93.75 points, it may gain an upside potential of a temporary jump towards 94.80-95 points, the nearest horizontal resistance level. But the index needs to reach 95 points first to pave the way to the 97 points landmark. Before that, index gains would be rather limited.
American and European markets are starting this week on the upside. The elections in Germany closed with a victory of German Social Democratic Party (SPD) that has won most of the seats in the country’s federal elections this Sunday by receiving 25.7% of the votes and beating Christian Democratic Union (CDU), conservative party of outgoing Chancellor Angela Merkel with its 24.1%. However, the investors’ community is still dizzied by the possible government shutdown and the looming of a debt ceiling as the U.S. congress has to pass the appropriations bill by September 30.
The U.S. debt is at a record high as it heads to over $29 trillion. Congress may limit the debt ceiling and therefore provoking a government shutdown. The U.S. Treasury Secretary Janet Yellen has warned policymakers that the government would run out of money in October if Congress does not allow for new borrowing.
Logically, nobody wants a technical default of the United States, so with all this clamor around this situation, Congress has no other way to approve the appropriations bill. The Senate may vote on this bill at the end of this week or at the beginning of next week. Nevertheless, the very fact that this process is being delaying may cause sell-off in the American market as investors are scared by the uncertainty and may seek a hedge position in advance.
The nearest resistance for the Dow Jones index is at the 34900-35000 area and for the S&P 500 broad market index – at 4470-4480. We may see sell-offs close to these levels.
The Greenback remains stable as the U.S. Dollar index is trading at its September highs. If the U.S. dollar index would climb above 93.53-93.75 points, it may gain an upside potential of a temporary jump towards 94.80-95 points, the nearest horizontal resistance level. But the index needs to reach 95 points first to pave the way to the 97 points landmark. Before that, index gains would be rather limited.
