USD lower, Stocks higher from the US Government shutdown — North American mid-week Market update

Log in to our mid-week North American Markets overview, where we examine the current themes in North America and provide an overview of indices and currency performances.

We are now halfway through the week, and the main storyline has shifted squarely toward the US government shutdown, which has sparked a sharp N-shaped (for nope) reversal in the US Dollar.

The greenback had been climbing steadily after a streak of upbeat economic data — GDP, jobless claims, and Powell’s more balanced-than-dovish tone last week pushed the DXY to fresh highs near 98.60.

But shutdown rumors quickly flipped the narrative, triggering heavy selling pressure in the reserve currency, currently trading almost one full-handle below.

That decline only deepened with today’s disappointing ADP employment release, while safe-haven flows steered further toward metals, with gold coming $5 off the $3,900 level.

US equities have also largely shrugged off any negative outlook from the shutdown, as all three indices are potentially on track to reach new all-time highs.

North of the border, Canada’s macro picture continues to underwhelm.

Retail sales and household consumption are rising, but this morning’s Manufacturing PMI, at 47.7, showed contraction yet again.

Meanwhile, the newly released Bank of Canada minutes confirmed that all members supported the recent cut to 2.50%. Markets now price a 55% chance of another 25 bps cut at the October 29 meeting.

You can access the report right here.

So, with the US shutdown shaking confidence in the dollar and Canadian data still soft, attention now shifts to whether metals and risk assets can maintain their momentum with the NFP data almost surely getting delayed.

Let’s take a look at the charts.

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Let's dive right into a few charts to get an overview on North American Markets, from US and Canadian equity Markets performance, USD and CAD performance to USDCAD and DXY charts.

North American indices have withheld a negative performance despite the ongoing narratives with the S&P 500 on top in the US and the Canadian TSX still beating its neighbors.

On the other side of the Atlantic, European stocks have largely taken the lead with North American getting slowed down by the tariffs and downbeat economic performance.

US Indices are still having a stellar day today with both the Nasdaq a

Much has changed, both fundamentally and technically since our most-recent Dollar Index analysis which had supposed a much stronger US Dollar, particularly with the Head and Shoulders that had developed (now invalidated).

With equity markets shrugging off the government shutdown, it will be interesting to see if the US Dollar maintains its lower descent.

Breaking the session and weekly lows at 97.46 would point to a further correction towards the 97.00 handle.

For bulls, look above the session highs 97.86 and a further rebound above the 98.00 Pivot.

Levels to watch for the Dollar Index:

Support Levels:

• August Range support 97.25 to 97.60
• weekly lows at 97.46
• 2025 Lows Major support 96.50 to 97.00
• Early 2022 Conslidation just below 96.00
• 95.00 Key Support

Resistance Levels:

• session highs 97.86
• 8H MA 200 98.12
• 98.00 higher timeframe Pivot
• Current range Extreme resistance 98.50
• 100.00 Main resistance zone

With the post-FOMC US dollar rally, the greenback is still at a decent position compared to its mid-week bottom.

Looking at the trends forming this week however, this might change.

Both the JPY and AUD have held very strong however due to their own countries being subject to strong fundamentals.

The momentum one turns his head, the Loonie loses a percent against all the other majors.

Jokes aside, the Canadian dollar has lost against every major in the past week-and a half stretch and except for some small dip-buying today, the trajectory still doesn't look very glorious.

USDCAD is breaking higher after reaching new highs last Friday.

A weekly close above the Aug 22 peak at 1.3925 would be needed to confirm such a breakout however, with 4H RSI momentum currently showing a divergence in what looks like an intraday double top.

Levels to place on your USDCAD charts:

Resistance Levels

• Friday Sep 29 highs around 1.3950 (double top?)
• 1.40 Major resistance
• April 3 lows around 1.4050

Support Levels

• 1.3925 Aug 22 highs current pivot
• 1.3850 to 1.3860 support
• 1.38 Handle +/- 150 pips
• 1.3550 Main 2025 Support

The rest of the week should be dominated by US data, but with the BLS data not releasing due to the shutdown, NFP and Jobless claims will not be released, which may lead to more uncertainty.

Still, watch the Services PMI data releasing this Friday in the US, and keep an eye on headlines if the data ends up being programmed.

More on this to come through our future reports.

Safe Trades!

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