Dollar at risk from likely lack of a bipartisan accord to increase the debt limit
Second-quarter GDP growth was revised higher last week, and home sales, durable goods orders and personal income and spending all came out stronger than expected. The US economy seems to be growing at a steady rate even while the labour market creates few jobs, a sign that the employment slowdown has more to do with supply (lowered by the immigration crackdown and demographics) than a faltering economy.
A spate of labour market reports culminating in the September payrolls number on Friday will add further clarity to the state of the jobs market, but the likely lack of a bipartisan accord to increase the debt limit may interfere with economic releases out of the US. This is likely to add a further sense of political chaos and institutional degradation, which could put pay to some of the recent strength that we’ve witnessed in the dollar.
Author
Matthew Ryan, CFA
Ebury
Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.
