The US being the central hub of the world economy is in serious threat of downturn. The US market is an emblem of the world economy. The strengthening of the US economy helps the European Union, Chinese and other emerging economy boom thus showing the prospects for the US exports. But with the current shutdown of the US Congress, it has ended the impasse of the government funding due to the lack of consensus between the Democrats and Republicans regarding the budget. The consequences have been shown by the cutoff of the 80,000 federal jobs which may reach to 1 million levels if it lasts long. The US $ 15.7 trillion economy will be suffering as the investors and business sentiment on spending will hover down due to the current political embargo. Its consequences will hit hard all around the economy showing its impact spill over the world economy.

The US Dollar retreated to the most of the currency basket. The EUR-USD recoiled to the most since 8 months high. The US manufacturing PMI showed the positive signs showing better results for ISM manufacturing PMI rise to 56.2 from the previous level of 55.7 and Chicago PMI rise to 55.7 from the previous level of 53 from Augusts’ data. But it didn’t support the greenback. The most favored greenback all around the world, with the delay in the economic solutions as soon as possible, will lose the economic growth thus losing around USD 300 million a day in the economic output.

The trade deficit has inflated the US economy with the largest trade gap with China and European Union. The trade gap with China, the world’s second-biggest economy, widened to a record $30.1 billion from $26.6 billion while the deficit with the European Union was reached $13.9 billion to a level high shown by the August data. As the US economy was on an improving trend, the euphoria over the investors’ sentiment of cutting back the $85 billion assets purchases had been refrained by the Fed on 19th September.

The next problem to be encountered is the debt limit ceilings as the US borrowing ability is to be limited till 17th of October and with further delays may lead to the US default over the debt obligations thus reaching to slump of the economy and spilling shockwaves around the globe. Here too the conformity between the Democrats and Republicans come as the obstruction to increase the debt ceilings as ‘Obamacare’ is likely to lay a wager.

The most of the commodities from gold to silver to copper to palladium ebbed to the bearish level showing the gold drop by 2.83%, silver by 2.51%, copper by 1.35% and palladium by 0.95%. If the effect is to last long, the uptrend will lose lure in the commodities market too.