Should We Be Wary of Market Risks Associated with the U.S. Government Shutdown?

Should We Be on Alert for Market Risks Associated with the U.S. Government Shutdown?

02.10.2025

In the U.S. currency market yesterday, the U.S. dollar fell against the yen despite the September ISM Manufacturing Index—released yesterday—coming in at 49.1, up from the previous month’s 48.7 and exceeding market expectations of 49.0. The USD/JPY pair fell from 148.210 to 146.588.On the hourly chart, the price has moved from above the 20-period moving average (MA) to below it. On the 4-hour chart, the price has fallen to near the -2σ level of the Bollinger Bands. On the daily chart, the pair has fallen for four consecutive days and has now broken below the 200-period simple moving average (SMA) during a retest.

European currencies saw the euro trade in a narrow range against the U.S. dollar after preliminary data released yesterday showed that the Eurozone’s September Harmonized Index of Consumer Prices (HICP) rose to 2.2% year-over-year, up from 2.0% the previous month.The EUR/USD pair traded between 1.1715 and 1.1778, with price action remaining within the range of the 20-period moving average (MA) on the hourly chart throughout the session.On the 4-hour chart, the pair is seeking direction while finding support at the 200-period simple moving average (SMA), and on the daily chart, it is currently attempting to break above the level just below the 20-period moving average (MA).

Today’s economic indicators include Japan’s monetary base and foreign and domestic securities investment at 8:50, Australia’strade balance, and the RBA’s semi-annual Financial Stability Report; at 14:00, Japan’s Consumer Sentiment Index; at 15:30, Switzerland’s Consumer Price Index; at 15:35, remarks by Bank of Japan Deputy Governor Uchida; at 15:45, France’s budget balance;at 18:00: Eurozone Employment Statistics; at 20:30: U.S. Challenger Layoffs; at 23:30: U.S. Weekly Natural Gas Inventories; and remarks by Logan, President of the Dallas Fed.Note that the U.S. initial jobless claims and U.S. durable goods orders have been postponed due to the partial U.S. government shutdown. Investors should remain vigilant regarding market risks associated with the government shutdown and watch to see if the U.S. dollar, which has weakened against the yen, will show further weakness.