The dollar weakened for a fourth day running, hovering near 98.20 in Asia on Friday. This drop reflects investor unease stemming from the US government closure, alongside growing bets that the Fed will lower interest rates. All this is happening amidst difficulties resurfacing in relations between America and China.
For three weeks, the U.S. government remains closed because politicians haven’t agreed on how to fund things. As a result, important financial data is delayed, disrupting currency exchange transactions.
The heat is on—a Federal Reserve governor voiced support for lowering rates soon, while another wants even bigger cuts next year. To top it off, reports suggest people are buying less; moreover, job losses are increasing.
China’s proposed restrictions on rare earth shipments were condemned by US Treasury Secretary Scott Bessent, who called them both economic pressure and an attempt to control the global flow of these. Despite this sharp rebuke, American representatives indicated discussions haven’t been ruled out.
The dollar’s decline shows traders are increasingly uneasy regarding what lies ahead for the economy—also, how policymakers will respond. A dip in the DXY to around 98 suggests hesitation; people want to see what the Federal Reserve does next, alongside greater certainty concerning American politics.
