"The partial shutdown could have an impact on the economy and visibility if data releases are affected. Adding to the unease are expectations that Donald Trump may announce a new Federal Reserve Chair in the coming weeks, with markets concerned the nominee could lean more dovish. Such a move would likely reinforce doubts over the Fed's independence and extend downward pressure on the dollar."
"Trade policy is also back in focus after Trump signalled plans to raise tariffs on South Korea, reviving fears that unilateral trade actions could return to the forefront. Should risks of an aggressive tariff policy escalate, US assets might come under pressure. Externally, the dollar remains vulnerable to developments in Japan. Speculation around a potential coordinated currency intervention involving the Federal Reserve and the Bank of Japan continues to fuel demand for the yen, which could generate additional selling pressure on the greenback."
The US dollar tried to stabilise near multi-month lows but remains vulnerable to sustained downward pressure. Domestic risks include the prospect of another partial US government shutdown, which could affect the economy and data visibility. Markets expect a possible Trump nomination for a new Federal Reserve Chair that could lean dovish, raising doubts over Fed independence and weakening the dollar. Trade concerns have resurfaced after signals of higher tariffs on South Korea, which could pressure US assets. Externally, speculation of coordinated intervention with Japan is boosting demand for the yen. The Fed rate decision and forward guidance are the main near-term catalysts for dollar and Treasury volatility.
#us-dollar #federal-reserve-chair #us-government-shutdown #tariffs-on-south-korea #japan-currency-intervention
Read at London Business News | Londonlovesbusiness.com
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