US: Risk Of Government Shutdown Increases After Trump 'Pocket Rescission'
The White House Office of Management and Budget confirmed in a statement that President Trump cancelled USD$4.9 billion of Congressional authorised funds "using a pocket rescission." Steven Nelson at the NY Post notes that pocket recissions are "a legally debated maneuver that hasn’t been used in 48 years".
- The move will be seen by Democrats as another attempt by OMB Director Russ Vought to wrestle control of federal spending away from Congress and concentrate it in the Executive. It follows a roughly USD$9 billion rescissions package that passed Congress on party lines earlier in the summer.
- Jake Sherman at Punchbowl notes that the move will "dramatically increase the chances of a government shutdown in September."
- When Congress returns next week, it must pass a funding measure to avert a government shutdown on October 1. Any funding extension will need Democratic support. Senate Minority Leader Chuck Schumer (D-NY) was criticised by some elements of his party for approving a funding measure in April, suggesting he may be likely to take a harder line this time.
- Sam Stein at MSNBC asks: "So what's the intellectual case for Democrats to fund the government if pocket recessions are on the table? I suppose the answer is: better to have things running than not running. But if the president can just go in and choose to turn certain stuff off, is that a compelling answer?"
Figure 1: Government Shutdown in 2025 (Polymarket)
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STIR FUTURES: BLOCK: Sep'25 SOFR Sale
- -10,000 SFRU5 95.835, post time bid at 0859:48ET, contract trades 95.835 last (-0.010).
AUDUSD TECHS: Clears The 20- And 50-day EMAs
- RES 4: 0.6700 76.4% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6688 High Nov 7 ‘24
- RES 2: 0.6677 0.764 proj of the Jun 23 - Jul 11 - 17 price swing
- RES 1: 0.6538/6625 High Jul 29 / 24 and the bull trigger
- PRICE: 0.6467 @ 14:05 BST Jul 30
- SUP 1: 0.6455 Low Jul 17
- SUP 2: 0.6373 Low Jun 23 and a bear trigger
- SUP 3: 0.6354 38.2% retracement of the Apr 9 - Jul 24 upleg
- SUP 4: 0.6323 Low Apr 16
AUDUSD has this week traded through both the 20- and 50-day EMAs. This undermines a recent bullish theme and signals the likely start of a corrective cycle. The next support to watch lies at 0.6455 the Jul 17 low. A clear break of this level would strengthen a bearish threat and signal scope for an extension towards 0.6373, the Jun 23 low. Key resistance has been defined at 0.6625 the Jul 24 high. It also represents the bull trigger.
FOREX: Post-Data Phase of USD Strength Helps Majors Through New Levels
Post-data phase of USD strength has USD/JPY clearing yesterday's highs at typing - this makes for a fourth session of higher highs and brings key resistance at 149.18 into range - the Jul 16 multi-month high. This raises focus on sizeable option interest into 148.65/149.00 ($2.38bln). Having started somewhat weaker, the USD is now ahead as the best performer in G10 and EUR still remains the favoured expression: following yesterday's close below the 50-dma, EUR/USD is clear of 1.1519 support to expose 1.1446 and below.
- This makes for a higher USD Index: 99.421 the latest level to have been cleared, opening 99.864 downtrending 100-dma.
- In tandem with the USD strength, spot gold is under pressure here, dropping $15/oz to challenge the Monday pullback low.
