U.S. Government Shutdown Worsens Currency Trading Conditions
The longest U.S. government shutdown on record is causing currency traders to face their worst year in decades due to a scarcity of economic data clouding the dollar's outlook.
Impact on Currency Market Performance
Foreign-exchange investors are on track for the weakest annual results since 2005, according to the BarclayHedge index. The difficulties were already noticeable on Wall Street before the shutdown's data freeze.
- Major financial firms including Goldman Sachs Group Inc., Morgan Stanley, and Bank of New York Mellon Corp. reported declines in currency trading revenues last quarter.
- Crucial economic and market positioning data have not been released for several weeks amid the federal shutdown, including key monthly reports on the U.S. economy.
Consequences for Traders and Strategists
This lack of data has made traders hesitant to make large bets on the dollar's direction. Quantitative funds that rely on computer algorithms have less reliable information to operate on, leading strategists to delay updating their forecasts.
The federal shutdown has halted important economic updates, reducing market transparency and increasing uncertainty for currency traders.
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Author’s Summary: The prolonged U.S. government shutdown is significantly disrupting currency markets by withholding key economic data, leading to the poorest trading year in decades and increased uncertainty among investors.
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