U.S. Government Shutdown Hurting Currency Traders
The longest U.S. government shutdown on record is causing currency traders to face their worst year in decades. A shortage of economic data is clouding the outlook for the dollar, according to recent reports.
Impact on Currency Trading Performance
Foreign-exchange investors are on track for their poorest annual results since 2005, based on the BarclayHedge index. The difficulties were evident even before the data freeze, with firms like Goldman Sachs Group Inc., Morgan Stanley, and Bank of New York Mellon Corp. reporting declines in currency trading revenues last quarter.
Consequences of the Data Freeze
- Key economic and market positioning data has not been released for weeks due to the federal shutdown.
- Missing was an important monthly reading of U.S. economic indicators.
- Traders are hesitant to make large bets on the dollar's direction amid uncertainty.
- Quantitative funds rely on high-quality data, which has been unavailable.
- Strategists are postponing updates to their currency forecasts.
"The longest United States government shutdown on record is consigning currency traders to their worst year in decades as a dearth of economic data clouds the outlook for the dollar."
Summary
The U.S. government shutdown is significantly impacting currency markets by creating a data vacuum that limits informed trading decisions and deepens a challenging year for traders.