DXY: Dollar Index Up 1.6%, Charting Its Best Week in a Year Despite Govt Shutdown

Greenback’s index is up more than 1.6% on the week so far. Why so resilient even amid a near-total economic blackout?

💵 Dollar Flexes Hard, Data or No Data

• The US dollar index DXY climbed early Friday, topping 99.42, as the greenback defied logic — and a government shutdown — to post its best week since November 2024, up 1.6% so far.
• Normally, a federal shutdown would weigh on the dollar as markets lose faith in US.fiscal management and get cautious about the economy. But this time? Traders are shrugging it off, betting that the Fed, instead, will stay cautious on rate cuts while the data lights stay off.
• When visibility disappears, safety becomes the trade. The dollar isn’t rallying because things look great. It’s likely rallying because no one knows what’s going on and traders are seeking a safe refuge.

📉 Economic Blackout: Flying in the Dark

• The US government shutdown, now in its tenth day, has effectively hit “pause” on the flow of economic data — no nonfarm payrolls, no jobless claims, possibly no CPI inflation print next week either. Traders are literally flying through the charts with no compass or radar.
• Without fresh data, investors can’t confirm whether inflation is cooling or if the job market is cracking. That uncertainty has prompted markets to price in fewer rate cuts, giving the dollar an artificial boost.
• You can say that this is an unusual bullish setup. Bad news can’t come out if no one’s around to track and publish it. “Let’s just assume it’s bad and buy up dollars,” traders, probably.

📊 Fed Cuts Delayed? Market May Think So

• Futures markets now see a growing chance that the Federal Reserve will hold off on aggressive easing, at least at the final meeting of 2025, until it gets clearer visibility into the economy. With no data, there’s no urgency to act.
• The dollar’s gain is also magnified by weakness elsewhere — the euro and the yen both dropped as Europe and Japan grapple with their own inflation and political challenges.
• Until Washington flips the switch back on, the dollar is expected to remain choppy, volatile, and moving in either direction while forex speculators try to figure it out.