The US Dollar (USD) is broadly weaker in response the end of the US government shutdown, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD and dollar assets trade softly on reopening

"Trading was relatively calm in the immediate aftermath of President Trump signing legislation last night that will slowly get Federal workers back to work as of today. But the USD slumped right out of the gate of European trade. DXY losses are compromising trend support that has guided the index higher since September and, after the recent peak in the index around resistance in the low 100 zone, the technical undertone of the DXY chart looks soft. Bonds are mostly weaker while US equity futures are mixed to marginally lower."

"This is evidently not a positive embrace of developments and may reflect investors’ concerns about the tone of US data reports that will start flowing again in the near future. September NFP data could emerge in the next few days and, at the moment, November NFP is due on December 5th, just ahead of the FOMC decision on the 10th. The BLS will update its release schedule once it is fully back at work and will likely skip some October reports entirely. The softer USD today suggests markets are betting on weak data bolstering the outlook for lower Fed rates."

"Recent comments from Fed policymakers suggest that there is a significant difference of opinion about the December policy decision, however. This has dented market confidence in the outlook for lower US rate policy. Swaps pricing reflects uncertainty about the outcome of the last Fed meeting this year, with a rate cut now no better than a 50/50 call. China releases IP and Retail Sales (plus construction and housing) data this evening. We have marked-to-market some of our FX forecasts for year-end and smoothed out trends for 2026 and into 2027 but the core view of broader USD weakness in unchanged."