At Any Rate Global FX: Shutdown limbo
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Oct 3, 2025 The hosts delve into how the U.S. government shutdown could influence the dollar's value. They discuss the impending Japan LDP election and its potential market impact, especially on the yen. Historical ties between U.S. political strife and alternative reserve assets like gold and bitcoin are explored. Insights into CAD as a strategic dollar proxy highlight Canadian economic challenges. Finally, the latest FX reserve manager flows reveal shifting trends in currency allocations, with minimal de-risking from dollars.
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Dollar Smile From Fed Constraints
- Arindam Sandilya sees a structural dollar bearish case driven by a constrained Fed and global growth strength.
- He calls the current environment a ‘dollar smile’ with cyclical and precious-metal rallies signalling debasement fears.
Shutdown Creates Asymmetric Dollar Risk
- Patrick Locke says the shutdown creates an asymmetric setup that is rarely dollar positive.
- He expects the shutdown to act as a vol suppressant and to generally support running dollar shorts temporarily.
Weak Labour Data Could Nudge Fed Dovish
- Patrick highlights weak near-term US labour signals (JOLTS, ADP, consumer forward-looking data) which align with softer NFP trends.
- He warns this could push some Fed members back toward 50bp bias and be dovish for the dollar.