Messy world – And not our beloved Lionel Messi. Japan’s ruling party is struggling to form a government following a dispute with a coalition partner, and time is running out for outgoing French PM Sebastien Lecornu to salvage his government. In the US, hopes for a quick resolution of the government shutdown have faded, but that does not stop its currency from rising.
Why it matters
Safe haven again? – The US is in trouble, so buy the Greenback because the rest of the world will do worse. That logic may be making its way back after being absent in 2025. If the run to the US Dollar continues, bad economic data could benefit the same, while good news would be adverse for it. The only thing missing in this reaction mechanism is data to react to it.
What’s next
Reaction to reopening – When the US government returns to business, will the US Dollar fall? That would be an expression of a “risk-on” move, showing the Greenback is indeed a safe haven. In case it rises, we can assume that markets are still seeking a reaction
mechanism.