A potential US government shutdown that could start October 1st looms. Economists at Wells Fargo assess its implications for the US Dollar.
Any Greenback depreciation will be short-lived
Should a shutdown transpire, there could be a negative impact on the USD, albeit one that is likely to be modest and short-lived.
Recent history suggests the US Dollar Index (DXY) could fall by around 1%-1.5% in the several weeks following the start of the shutdown. Also in recent shutdown episodes, three months after the shutdown began the Dollar had recovered its losses and there was no meaningful or long-lasting impact on the USD.
In the event a US government shutdown does occur, we would expect a similar pattern to unfold, and we would not make significant changes to our longer-term outlook for the USD.