Global markets ended the week higher, with Wall Street shrugging off the U.S. government shutdown and the S&P 500 breaking past 6,700 for the first time.
Despite the political gridlock, equities extended a five-month winning streak, rising roughly 3.5% on the week and over 14% year-to-date. Yet beneath the bullish surface, the currency markets told a more cautious story, shaped by missing economic data, policy uncertainty, and diverging central bank signals.
The dollar recorded its worst week since July, slipping 0.1% on the DXY index to 97.69 as shutdown uncertainty dented sentiment. The euro strengthened 0.2% to $1.1743, its best week in a month, while sterling climbed 0.3% to $1.3479 — both benefiting from softer U.S. data and fading dollar momentum. The Swiss franc also gained, with USD/CHF down 0.4% for the week, while the yen remained choppy amid speculation about the Bank of Japan’s next move ahead of the ruling party’s leadership vote.
The U.S. government shutdown, which began at midnight Wednesday, suspended operations at the Bureau of Labor Statistics and cancelled the closely watched nonfarm payrolls report. Without one of the most highly anticipated monthly macroeconomic reports, traders had to rely on indicators such as ADP employment and job-cut figures to gauge labor market conditions.
Treasury Secretary Scott Bessent warned that GDP growth could take a temporary hit, but investors were largely unfazed — at least for now. Still, the absence of official data leaves the Federal Reserve navigating “in the dark” ahead of its October 28-29 meeting, where markets are pricing in two more rate cuts before the end of the year.
“Anytime the market starts to worry about governability in the U.S., it’s usually not a good story for the currency,” Macquarie’s currency strategist Thierry Wizman noted.
Pairs In Focus
1. CHF SGD
After ranging for most of September, this pair has once again rejected from 1.61270, which is now strong support.
As the price broke and closed above a key level at 1.61800, there is a chance it will try to make a run for the resistance above at 1.62440.
CHF/SGD Daily Chart, Source: TradingView
2. EUR JPY
The euro found its footing against the yen after declining through most of the week. The support at 172.400, which coincides with the key level, should provide enough footing to move higher as long as it holds on a daily close basis.
EUR/JPY Daily chart, Source: TradingView
The weaker resistance above should be at 173.900, while the previous high sits at 175.340.
Looking At The Week Ahead
This week, the FED will release its latest Meeting Minutes, while on Wednesday, the Reserve Bank of New Zealand will vote on the interest rate. The consensus is a 25bps cut, which will bring the island nation’s interest rate down to 2.75%.
Finally, markets will tune in to hear what Federal Reserve Chair Jerome Powell has to say about the situation. Without data in hand, Powell might provide valuable insight on the central bank’s next step from the banking conference in Washington, D.C., on Thursday, October 9.
Note: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article's contents. Readers may use this data for information and educational purposes only.
