2/10/2025 Daily Reports
Dollar Slips Under Shutdown Pressure — Europe, Asia Currencies Rise
- The U.S. dollar is softening as Congress failed to avert a government shutdown, stoking fears this may be a protracted closure.
- Historically, shutdowns last from 3 to 35 days, and prior episodes often lead to a modest dollar pullback, yield-curve steepening, and mixed equity outcomes.
- The Japanese yen has emerged as a safe-haven favorite in the current turmoil, benefiting from defensive flows.
- With the dollar weakening, EUR/USD is likely to draw strength — especially if eurozone inflation holds steady near expectations (~2.2 % YoY).
- Key U.S. data releases may be delayed by the shutdown (e.g. payroll reports), creating a vacuum in signals the Federal Reserve relies on.
- What’s Next? : This shutdown phase as a turning point: the weaker dollar environment is likely to persist unless Washington moves quickly. The yen and euro are poised to gain further in that scenario. The real wildcard is how the Fed will respond without full data — a cautious tone may brace markets.
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