Crude Oil Challenging 65 US$ Area, Dollar Heading Lower

After a whole day plenty of negotiations to avert the Federal Government shutdown, things at this time, January 18th,10 PM ET, continue showing a still possible Government defunding event. Obviously, this possible Federal Government shutdown, has a potentially damaging effect on the US currency, which was clearly felt by markets during the past 3-4 weeks.

As a result, and as a consequence of the possible shutdown event, the Dollar was also the key driver this week, as it continues showing a strong weakness. The DXc1 Dollar Index future went down right into the 90 relevant current support area, with the next level of support between the 89-88 area.

If the Government shutdown is finally confirmed, and depending how serious and extended the following negotiations to reopen the federal Government will be, the current Dollar down-trending behavior could eventually trigger and additional down move, with the obvious bearish implications on equities and the USA economical scenario.

Remember that the simple fact of unblocking the debt ceiling limit to increase debt, is anything but a bullish factor for any economy.

However, we have to understand that a weaker Dollar, will potentially impact commodities prices as a bullish factor, because you will now need more US$ to buy the same crude oil, for example. Just remember what happened during the 2008-2009 financial crisis main period, when the crude oil reached the absurd price of 147 US$/barrel as the whole global economy melted down as never before.

In short, Crude Oil is right now challenging the 65 US$ price level, just waiting for the referred political scenario resolution, which would eventually happen in matter of hours.

Chart and Data provided by MetaStock powered by Thomson Reuters, Alerts provided by e-globalTrading