The federal debt ceiling issues maintains the thrill of these days as the Congress hasn’t reach an agreement yet. President Obama is confident that the government won’t get to the point of shutdown as this scenario would be devastating the american economy. As is was observed in the past, this kind of events, when the government shows weakness and uncertainty, results in a degradation of the business and consumer confidence sectors.

As expected consequences of this situation we can observe the price of gold futures which went up 8% for the quarter. Later this week, as the job report is expected on Friday, economists believe that the force behind the NFP report will be the decision concerning the fiscal policy. In other words, the nonfarm payrolls may be influenced, even if is a last minute impacting factor.

For now, Congress still have to agree on a bill that would fund the government for next month. If Congress fail to take a decision, we may see the government half paralyzed. As suggests the latest news, any measure that will be taken in order to temporarily overcome this situation will be implemented only if “Obamacare” will be at least one year postponed.

Since the new Prime Minister Shinzō Abe was elected for this position, the Japanese citizens knew that they chose the right person in order to see radical changes implemented. Thus, the approach of Shinzō Abe consists of enlarged fiscal and monetary stimulus as well as important structural improvements in the Japanese economy. It is known from the beginning that the main target is to overcome the deflation, to solve the issue of the national debt and to sustain the economic growth of the country.

As lately we heard rumors about a possible increasing in the sales tax, now it was confirmed that it will be raised from 5% to 8% (the first increase since 1997) in April 2014. Is expected this change to go further and to have the sales tax increased to 10% in 2015. As the tax increase is aimed to gather 8 trillion yen a year, this measure is thought to be needed in order to rein Japan’s public debt and help reduce the budget deficit which now reached 10% of GDP. As the sales tax increase is strongly affecting the Japanese citizens, Prime Minister Shinzō Abe is expected to come with a solution. The key is expected to be announced later this year and consists of an additional $50 billion stimulus package in the first year of having the citizens bearing the raised costs.

Speaking about the new stimulus package, economists believe it is actually necessary to have it. Moreover, it is expected to have it operating in the infrastructure sector and most of the fields correlated with it. Also by the end of the year we will have a decision taken in relation with the corporate tax. As it is considered that the Japanese corporate tax is one of the biggest, reducing this tax is seen as a boost in the business environment and an encouragement for economic growth.

Considering all the above mentioned changes, we can say that important steps are taken and indeed “Abenomics” is pointing towards a direction. All that is being left is to wait and see to what extend these changes will impact the real economy.

Mario Draghi delivered a speech today, during which no spectacular information impressed investors and the benchmark interest rate was left unchanged as expected. More broadly, Mario Draghi’s promises are highlited by the engagement to ensure interest rates in line with price stability. The European Central Bank is ready to react to any weakness or error of the system as it disposes of a vast vary of instruments which have the power to reset the stability. As it concerns other aspects of the economy, the unemployment rate remains at high levels, the economic recovery maintains a poor pace of recovery while inflationary risks doesn’t represent a concern.

On the other hand, the news that came from Italy have troubled the market more than expected. The Italian Premier Enrico Letta won a confidence vote. Along with this decision increase the risks to see the former Prime Minister Silvio Berlusconi being thrown out of the Senate. A final decision concerning Silvio Berlusconi is going to be taken soon as the Senate committee is due to meet on Friday and have a vote on whether or not to take Berlusconi’s seat. The Italian political scene may know a better picture as the changing of the Prime Minister is expected to lead the Italian economy towards stability.

A pretty interesting week has ended. The data published for Great Britain was mixed, both manufacturing and construction PMI’s came under estimates, but the services PMI was in line with the expectations. The Chinese Manufacturing PMI was 51.1, under the forecasted value and the Canadian GDP did not surprise the markets.

From the Euro Area the Unemployment rate was 12.00% and the retail sales are up 0.4%, but the ECB remained dovish with their monetary policy. The Euro gained some trust during the ECB’s press conference, but the impulse came from the fact that Letta got the vote in Italy. United States published an ADP under estimates with 11K, but the unemployment claims rise only with 308K. The Non-Farm Payroll was scheduled for Friday, but because of the partial shutdown it was deleted from the FX calendar.

For next week we are expecting:

As you can see the most important indicators that will be published during next week are the Canadian Trade Balance, Great Britain’s Manufacturing Production and monetary policy. Australia and Canada will publish their labor market data. From the Euro Area Mario Draghi will have a speech and the United States will release the FOMC meeting minutes.