US Shutdown Worsens Currency Trading in 2025
The longest US government shutdown on record is causing significant challenges for currency traders, resulting in the worst year for currency trading since 2005. A lack of recent economic data has left traders uncertain about the dollar's direction.
Impact on Traders and Market Data
Crucial economic and market positioning data have not been released for weeks due to the shutdown, reducing traders’ confidence to make large bets on the US dollar. Quantitative trading funds face difficulties as they rely on high-quality data, which has recently been unavailable.
Effects on Major Financial Institutions
- Goldman Sachs Group, Morgan Stanley, and Bank of New York Mellon reported declines in currency trading revenues in the last quarter.
- Traders are postponing updates to their forecasts because of uncertainty and lack of data.
Market Volatility Decline
Foreign exchange market volatility has dropped significantly below long-term averages. This is a sharp contrast to the tumultuous market swings seen earlier in the year, especially following US President Donald Trump’s global tariff announcement in April.
“Crucial data have not been published in weeks, making traders less willing to stake big bets on where the US dollar is headed.”
“Foreign-exchange investors are on course for the poorest annual performance since 2005, according to a BarclayHedge index.”
With the ongoing shutdown, uncertainty clouds the outlook for the dollar and dampens market activity.
Author’s summary: The prolonged US government shutdown has led to a data blackout that severely hampers currency trading, contributing to the worst performance in nearly two decades.