Analysts: The dollar's safe-haven status is shaken, and the government shutdown may increase downside risks

Market analysts say the US dollar has been sold off this year during a prolonged and uncertain period, which in the past typically prompts investors to buy the greenback. Instead, traders are buying the euro, gold, yen, and Swiss franc. Another US government shutdown would be a potential risk. The dollar's performance during past shutdowns has been mixed, sometimes bolstered by its reserve currency status, but this appears much less likely now. Besides the apparent loss of the dollar's safe-haven status, several other factors need to be considered in the event of another government shutdown. The Federal Reserve has just restarted its easing cycle and is more likely to continue cutting interest rates. Rating agencies like Moody's downgraded the US's long-term credit rating in May, which will also affect its outlook going forward. Traders have also recently been buying the dollar, reducing their net short position from $18 billion in July to $6 billion. This leaves them less prepared for events that could weaken the dollar, a risk heightened when the dollar is no longer considered a safe asset. (Jinshi)