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Feb 28 - 10:55 AM

Credit Agricole: Analyzing USD Performance Ahead of US Government Shutdowns

By eFXdata  —  Feb 28 - 10:00 AM


Credit Agricole assesses the impact of potential US government shutdowns on the USD, considering the balance between positive market positioning ahead of the January Core PCE release and the negative implications of month-end rebalancing flows. With the looming threat of a partial government shutdown by 1 March, followed by a possible full shutdown by 8 March, the analysis delves into historical trends to gauge the USD's performance in similar past events.

Key Insights:

  • Balanced Risks for USD: Near-term risks for the USD are seen as balanced, influenced by positive market positioning and negative rebalancing flows, with the addition of potential government shutdown threats exacerbating the downside risks.

  • Historical Performance: In the lead-up to and the initial phase of previous US government shutdowns, the USD has historically underperformed compared to other safe-haven assets like the JPY, CHF, and gold.

  • Government Shutdown Threats: With the deadline for a potential partial government shutdown approaching, and a full shutdown possible a week later, efforts are underway in Washington to avert these outcomes, though the risk remains.


Considering historical trends, Credit Agricole highlights the potential for the USD to face downward pressure in the event of a US government shutdown. The analysis suggests that investors may see safe-haven currencies and assets as more attractive in the face of US political uncertainty, impacting the USD's performance in the short term.

Cr├ędit Agricole Research/Market Commentary


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