- US Dollar Index trades with mild gains near 99.55 in Wednesday’s early Asian session.
- Traders are concerned that the reopening will unleash a flood of data, which may show some weakening economic numbers.
- ADP showed US private employers shed more jobs than they created in the four weeks ending October 25.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, trades on a positive note around 99.55 during the Asian trading hours on Wednesday. The DXY edges higher amid hopes for the end of the US government shutdown. Traders will keep an eye on the Fedspeak later on Wednesday for more cues about the US interest rate.
The US Senate approved a compromise on Monday that would end the longest government shutdown in US history. The funding bill is headed to the House for a final vote as soon as Wednesday. If it passes in both chambers of Congress, it will head to US President Donald Trump to be signed into law. A potential end to the US government shutdown lifts the US Dollar against its rivals.
Nonetheless, traders believe that the resumption of economic data will point to a slowing economy and that would prompt the Federal Reserve (Fed) to reduce interest rates in December. This, in turn, might cap the upside for the DXY in the near term.
“When the government is closed, the news stream is non-existent. With the government going to reopen, I think we’re going to begin seeing more cracks,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
Data last week showed the US consumer sentiment slumped to its lowest level in three and a half years in early November. Additionally, private employers shed an average of 11,250 jobs per week on average in the four weeks ended October 25, the Automatic Data Processing (ADP) showed on Tuesday.
Traders will take more cues from Fed policymakers later in the day. The Fed’s John Williams, Anna Paulson, Christopher Waller, Raphael Bostic, Stephen Miran and Susan Collins are set to speak. Any hawkish remarks could boost the USD, while dovish comments could drag the DXY lower.
