The US Dollar's fate hangs in the balance as the government shutdown looms large. Will the Fed's decision to hold off in December keep the dollar's strength intact?
As the US government shutdown inches closer to becoming the longest in history, the currency market's attention shifts to economic indicators for clues. The US Dollar has been on a tear, reaching six-month peaks, as investors speculate on the Fed's next step. With the Fed's rate decision behind us, the focus now turns to the ISM Services PMI, a crucial gauge of the services sector's health.
On Wednesday, the US Dollar Index (DXY) extended its winning streak, breaking through the psychologically significant 100.00 level. This surge comes ahead of a packed day of economic releases, including the ADP Employment Change, S&P Global Services PMI, and the EIA's oil inventory report. But here's where it gets controversial: will the Fed's apparent pause in December be enough to sustain the dollar's rally?
The Eurozone's currency, EUR/USD, took a hit, plunging below the 1.1500 support, a level not seen since August. Germany's Factory Orders and Producer Prices in the Eurozone are in the spotlight, but can these indicators provide the much-needed support for the Euro?
The British Pound continued its downward spiral, with GBP/USD hitting new lows. The final S&P Global Services PMI from the UK is up next, but will it offer any respite for the battered currency?
In Japan, USD/JPY's gains from Monday were short-lived, as risk aversion dominated the market. The upcoming economic releases, including the Average Cash Earnings and Reuters Tankan Index, might provide some insight into the Yen's performance.
The Australian Dollar, AUD/USD, also succumbed to the US Dollar's strength, dropping to multi-day lows. The RBA's cautious approach didn't help matters, but will the Aussie find its footing again?
WTI crude oil prices remained range-bound, struggling around $60.00 per barrel, as oversupply concerns and the robust US Dollar weighed on the market.
Precious metals took a hit, with gold and silver prices tumbling. Gold revisited the $3,930 zone, while silver broke below $47.00 per ounce. But this is the part most people miss: is the market pricing in a Fed rate cut too soon, or is there more to this story?
As the shutdown continues, the economic calendar takes center stage. Will the Fed's decision to wait and see be enough to keep the dollar's momentum going? Share your thoughts in the comments below!
