FX.co ★ Dollar Steady as Shutdown Impact Seen Limited

The dollar index remained stable at around 97.8 on Friday, following a week marked by significant volatility. Market participants seem to perceive the US government shutdown as having minimal immediate effects on the economy. However, it has contributed to broader uncertainties regarding policy, inflation risks, and potential weaknesses in the labor market. On Thursday, Treasury Secretary Scott Bessent highlighted concerns that the funding gap might slow GDP growth. Meanwhile, President Donald Trump has threatened extensive federal layoffs to exert pressure on the Democrats. From a monetary policy perspective, Dallas Fed President Lorie Logan commented that last month's interest rate cut was a prudent measure to prevent a sharper decline in the job market. Although she acknowledged the slowdown is gradual and indicated there is no immediate need for further rate reductions, markets are nearly fully anticipating another 25 basis point cut this month, with an additional reduction anticipated by December.