By Bas Kooijman, CEO and Asset Manager, DHF Capital S.A
The US dollar traded in a consolidation phase on Wednesday, as a partial government shutdown continues to delay key economic releases and keeps investors in a wait-and-see mode. With job data postponed, markets are temporarily deprived of fresh evidence on the health of the US labour market, limiting directional moves in the market.
Markets could react to new data, including the ISM Services PMI figures release later today. While a slight pullback is expected, the index is still projected to remain comfortably above the 50 threshold.
Another upside surprise, similar to Monday’s sharp rebound in manufacturing, would reinforce the idea that US growth momentum remains intact. Such an outcome would likely strengthen expectations that the Federal Reserve can afford to stay put in 2026, supporting both the dollar and yields. For now, markets continue to price roughly two rate cuts this year.