Dollar falls on U.S. government shutdown, now on pace for worst annual decline in 22 years
The dollar fell Wednesday after U.S. lawmakers failed to avert a government shutdown, raising questions from traders about the potential economic impact.
The dollar index, which gauges the greenback’s performance against six rival currencies including the euro and the Japanese yen, lost 0.2% to trade at 97.61. The move put the benchmark down 10% for 2025. That would mark the U.S. currency’s biggest annual loss since 2003 — when it fell 14.6%.
The U.S. government shut down after the Senate failed to pass a short-term funding bill, and Democrats led by Senate minority leader Sen. Chuck Schumer and House minority leader Rep. Hakeem Jeffries push for a measure to extend enhanced Obamacare tax credits. President Donald Trump, meanwhile, threatened benefit cuts for “large numbers of people” if an agreement wasn’t reached.
“Historically, shutdowns have corresponded with a weaker USD, though primarily against safe haven currencies” such as the yen, Swiss franc and euro, wrote FX analyst Daniel Tobon of Citigroup. “Given persistent [U.S. dollar] pessimism in the current market narrative, further increased U.S. political uncertainty should also pressure the USD lower. However, a quick resolution to the shutdown could lead to limited follow-through, keeping us in similar ranges to recent months.”
The greenback’s latest decline drove gold futures — which trade in dollars — to reach a fresh all-time high above $3,900 an ounce.
Source: CNBC.com
