Forex daily analysis 1st October 2013

There was no compromise deal ahead of the US budget deadline and a partial shutdown will now take

place. The immediate market reaction was measured, but concerns will tend to increase if there is 

evidence of a prolonged closure as it would increase the risk of failure to raise the debt ceiling which 

would pose a much bigger market threat. There will be reduced speculation of any Fed tapering of bond 

purchases in October which will tend to curb dollar support. The Euro pushed back to the 1.3550 area 

with Euro-zone concerns making it difficult to extend gains.

There was a weaker than expected flash Euro-zone inflation figure of 1.1% for September from 1.3% 

previously which maintained expectations of a dovish ECB press conference on Wednesday following the 

monthly meeting and an overall accommodative policy stance by the ECB.