After 40 days of shutdown, light finally appears at the end of the tunnel. The U.S. Senate convened an emergency session over the weekend to vote on a potential agreement to end the shutdown. Global markets are preparing for the curtain to fall on this protracted drama, with expectations for a liquidity boost rising. The Dollar Index is wrestling with the 99.50 level, while the RMB central parity has made only minor adjustments around 7.0856. Over the long run, the dollar faces twin tests—policy and credibility—whereas the renminbi, supported by China’s trade surplus and asset attractiveness, may be standing at the starting line of a new appreciation cycle.

US government shutdown enters 40th day: How is it affecting Americans?
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If the Shutdown Ends: Political Compromise and Liquidity Release

The 40-day political stalemate is finally turning. The Senate Appropriations Committee has released three bills aimed at ending the shutdown.

On the 8th and 9th, President Trump posted on social media, continuing his criticism of Democrats’ healthcare policies, but his stance softened: he suggested reopening the government first and then discussing healthcare. The shutdown has already inflicted real damage on the U.S. economy. On November 9, Treasury Secretary Besant warned that if the shutdown continues, U.S. fourth-quarter GDP growth could be cut in half.

If the government reopens, more than one trillion dollars stockpiled in the Treasury General Account (TGA) would be released into markets over time. Industry insiders call this “stealth quantitative easing.” The first roughly $300 billion could flow into the real economy within four weeks, potentially lifting the velocity of money and providing a short-term boost to dollar liquidity.

Short-Term Dollar Index Moves

After briefly reclaiming the 100 handle last week, the Dollar Index quickly came under pressure. It touched 100.3620 early Wednesday before retreating. On Thursday it slipped back below 100, and the decline extended into Friday, closing at 99.5477 for a 0.18% weekly drop. The move was largely driven by labor-market warnings and weak consumer sentiment: U.S. corporate layoffs in October surged 175% YoY, and the University of Michigan consumer sentiment preliminary reading for November fell to 50.3, the lowest since June 2022—signaling increasingly pessimistic household views.

From a technical perspective, the DXY may maintain a downward bias after the recent bounce. If rallies stall below 99.855, the next downside targets may lie in the 99.35–99.15 area. “Judging from price action, the rebound that began on September 17 may already be over,” noted Huizhi Wealth, adding that the Dollar Index could set a new year-to-date low by the end of this month.

For now, the market’s core focus remains the weeks-long federal government shutdown. If the impasse isn’t resolved, the scheduled release of October CPI this week could be postponed. For a data-dependent Fed, this would shroud the December FOMC meeting in a “fog of data,” heightening uncertainty around the policy path—typically a headwind for the dollar.

RMB Outlook

On November 10, the RMB central parity was set at 7.0856 against the U.S. dollar, down 20 points from the previous day. The small tweak reflects repricing as markets anticipate an end to the shutdown. On Friday, November 14, China will release a series of key indicators for October, including industrial value-added, fixed-asset investment, and retail sales. Stronger-than-expected prints would directly signal domestic momentum, boost sentiment, and offer support to the RMB.

On policy, the Ministry of Finance recently reiterated the need to fully leverage a more proactive fiscal stance, continuing to power the recovery. As of end-October, China’s FX reserves rose month-on-month to US$3.343 trillion, marking three straight months above US$3.3 trillion—providing a solid backstop for RMB stability.

From a technical angle, some institutions expect USD/CNY to range near 7.10 in the short term, while the RMB retains a mild appreciation bias in the medium to long term. A caveat: if the U.S. shutdown ends unexpectedly and previously delayed core data are revised and come in strong, the dollar could rebound short-term, increasing RMB volatility.

Dongwu Securities’ Chief Economist Lu Zhe argues that 2025 not only marks the end of the three-year depreciation cycle, but could also begin a new RMB appreciation cycle. The view rests on two pillars: the return to current-account surplus and potential portfolio inflows. Lu projects that by end-2026, with the Dollar Index in structural decline, the combination of current-account surplus and net securities inflows could push USD/CNY below 7.0, with 6.70–6.80 as a potential year-end range.