USD: Another shutdown under way – Commerzbank
It should be noted that Vice President JD Vance has already warned that a government shutdown is imminent following talks with the Democrats, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.
Longer shutdown likely to weigh on the economy
"This is because the new fiscal year begins tomorrow and no new budget has been agreed upon yet. Two things are most relevant for the dollar: Since the Bureau of Labor Statistics is also likely to be affected by the shutdown, the publication of the labor market report will probably be postponed this week."
"This means that an important indicator of the future path of US interest rates will be missing. In addition, if the shutdown lasts for a longer period of time, it is also likely to weigh on the economy. However, none of these effects are permanent. Both the publications are likely to be made up for, and the economic consequences – as the past has shown – will also be made up for."
"After all, spending and wage payments are not simply canceled, but made later. As such, the dollar is likely to remain relatively unaffected during this latest shutdown episode."
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FXStreet Insights Team
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