Investor anxiety over prolonged political gridlock has revived safe-haven demand for the Japanese yen, Swiss franc, and euro, with FX strategists warning that extended uncertainty could add fresh downside pressure.
Citigroup’s Daniel Tobon noted that while past shutdowns had limited economic fallout, persistent USD pessimism combined with rising geopolitical and fiscal risks may increase selling interest.
The shutdown also led to the delay of key U.S. economic data, including the September nonfarm payrolls report, forcing traders to rely on alternative indicators.
Private Payroll Miss Undermines Labor Market Confidence
ADP data released Wednesday showed a surprise drop of 32,000 private-sector jobs in September, sharply missing the expected 45,000 gain. August’s data was also revised down to show a loss of 3,000 jobs, from a previously reported 54,000 increase. The miss sent Treasury yields lower, with the 10-year yield falling nearly 5 basis points to 4.102%. The 30-year yield dropped 3.4 basis points to 4.699%.
With the government shutdown delaying official BLS numbers, markets leaned on ADP as a proxy. The disappointing print compounds the bearish narrative for USD, signaling a potential softening in labor market strength — a key metric for the Federal Reserve’s rate stance.
