As traders prepare for the possibility of a US shutdown, evidence from past stalemates in DC suggests that the Japanese yen and the euro may be the preferred pairs against the dollar.—Tatiana Darie, Markets Live strategist. To read full analysis, click here.
The lack of key data on Friday in the event of a shutdown wouldn’t change the Fed’s decision for at least its upcoming meeting in October, according to David Seif, Nomura’s chief economist for developed markets.
“The less data that comes out, the less reason the Fed would have to deviate from the dot plot,” he said on Bloomberg Television on Tuesday. “The dot plot indicates 25 basis points in October. It is our view that will happen, whether or not they get the data.”
Traders have also been hearing from a handful of Fed speakers. Chicago Fed President Austan Goolsbee said the most recent round of tariffs may be causing businesses in his district to again pause decision-making in order to see where the levies settle.
Federal Reserve Bank of Dallas President Lorie Logan said policymakers should be cautious in considering additional interest-rate reductions while interest-rate reductions while inflation remains above target and the labor market relatively balanced.
Boston Fed President Susan Collins said further rate reductions may be appropriate this year given a weaker labor market, but officials need to remain wary about the possibility of persistent inflation. Fed Vice Chair Philip Jefferson warned that the central bank faces a cooling labor market alongside rising inflation pressures, complicating the policy outlook.
