US dollar traded mixed on Monday as the likelihood of a US government shutdown increased.
After a turbulent week, the US Dollar (USD) demonstrated why it deserved to be king. The US Federal Reserve could not have been clearer, confirming yet again that interest rates in the US will remain higher for a longer period of time. Because of interest rate differentials, the US Dollar is the stronger partner in most trading pairings.
Among all the macroeconomic noise, traders seemed unconcerned by the US government shutdown. till the evening of Friday the 13th. When House Speaker Kevin McCarthy sent all Representatives home for the weekend last Friday, traders realized that a settlement may once again be delayed until the last minute. This means that a risk premium may arise as the days pass without any optimistic signs from Capitol Hill about a possible compromise.
In the backdrop, US Dollar Traders will be watching for US GDP data later this week.
Strikes will have a negative impact on the US dollar’s GDP.
The Chicago Fed National Activity Index for August fell from 0.12 to -0.16 this week, signaling a fairly tranquil start to the week. A minor contraction, with the previous number reduced to 0.07.
The August Dallas Fed Manufacturing Business Index for the United States is anticipated to be released around 14:30 GMT. In July, the temperature was -17.2 degrees Fahrenheit.
At 15:30 GMT, the US Treasury will auction 3-month and 6-month notes at high interest rates.
At the start of the week in Asia, there is a significant dispersion in the equity markets: Japanese markets are rallying, with the Topix and Nikkei both in the green. Meanwhile, the Hang Seng Index in Hong Kong has dropped nearly 1.5% after Evergrande delayed a meeting with creditors to renegotiate terms. European shares are falling, with the German Dax down 1%. US futures are down, although they may recover approaching the US opening bell.
According to the CME Group FedWatch Tool, markets are pricing in a 77% possibility that the Federal Reserve will maintain interest rates constant at 0.5%.its November meeting. The current spat on Capitol Hill, as well as the United Auto Workers (UAW) strike, may force the Fed to leave interest rates steady until the end of the year.
With the US opening bell just around the horizon, the benchmark 10-year US Treasury jumps to 4.5089%, setting a new multi-year high.
