Polymarket, a prediction market platform, indicates a two-in-three likelihood that the current government shutdown will extend at least until next Wednesday. This situation has raised concerns among market analysts regarding the potential economic ramifications and the resilience of the US dollar in the face of uncertainty.
Now, the government shutdown is creating an operational logjam. Experts don’t expect these disruptions to make a significant dent in the dollar’s performance. This week is devoid of any tier-1 economic data releases. Consequently, the lack of further disappointing domestic data may be providing support for the greenback to remain firm amid continued political turmoil.
The shutdown’s most immediate effect is likely on the highly anticipated release of US jobs market data. With federal agencies partially shut down, the data delivery is sure to be further delayed, compromising this vital data. Local analysts are watching this situation extremely closely. Any delay in reporting these important economic metrics would be an unnecessary blow to investor confidence and market stability.
All eyes will now be on the coming September Consumer Price Index (CPI) report. We expect it to be released on October 15. Market participants are understandably nervous. Even worse, they worry that a delayed report on the shutdown still in progress might add to the selling pressure on the dollar. As the primary indicator for measuring inflationary trends and understanding the economy’s health, the CPI is crucial. Ordinarily, its timely release is essential for robust and accurate market evaluations.
Even as the political landscape shifts further with the enlarging fallout from the shutdown, experts are careful not to overstate their optimism about the dollar’s durability. They are careful to note that these immediate impacts are already being felt today. Longer-term economic fundamentals might work in favor of the currency.