BlockBeats News, September 30th – Market analysts say that since the beginning of this year, the US dollar has faced selling pressure during a long and uncertain period, a period that has historically prompted investors to buy the dollar. Instead, traders have been buying the Euro, Gold, Yen, and Franc. If the US government experiences another shutdown, it would pose a risk.
The past performance of the US dollar during shutdowns has been mixed. Sometimes it has appreciated due to its status as a reserve currency, but this possibility seems less likely now. Apart from the US dollar’s apparent loss of its “safe-haven” status, several other factors need to be considered if another government shutdown occurs. The Federal Reserve has just begun a new easing cycle and is more likely to continue cutting interest rates. Rating agencies like Moody’s downgraded the US long-term rating in May, and their outlook could be further impacted.
Traders have also been buying the US dollar recently, with net short positions decreasing from $18 billion in July to $6 billion. This has left them less prepared for events that might weaken the dollar, especially considering the higher risk when the dollar is no longer seen as a safe asset. (FXStreet)
