Bloomberg pointed to increased pressure on the dollar amid the expected shutdown in the United States
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- Bloomberg pointed to increased pressure on the dollar amid the expected shutdown in the United States
The threat of another shutdown in the United States will significantly increase the risks of a weakening dollar. This was reported by Bloomberg on September 30.
The authors of the material note that during previous shutdowns — in 2013, early 2018, and late 2018-2019 - the dollar index declined both during and immediately after it. The most noticeable drop occurred in the 35-day period from December 2018 to January 2019, when the currency lost about 2%.
"At the moment, the dollar is showing its third consecutive daily decline, having lost 0.6%. The implied volatility of euro-dollar options tends to increase before shutdowns, which indicates how quickly traders take into account the risks of failures," the publication says.
Experts note that a government shutdown could weaken the dollar in the short term, especially with delays in the publication of economic data.
On September 19, the U.S. Senate rejected a bill on short-term financing of the government, which was supposed to ensure the work of federal agencies from September 30 to November 21. Trump said that after the rejection of this bill, a shutdown is possible in the country.
The Politico newspaper, citing sources in the White House, reported on September 26 that the administration of US President Donald Trump is waiting for a government shutdown on Wednesday, October 1, and does not plan to negotiate with the Democratic Party. The newspaper's interlocutor noted that the lack of negotiations and the onset of the shutdown should cause the Democrats "maximum pain."
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