USD extends gains as Gold surges past $4,000 – BBH

US Dollar (USD) is extending its advanced against most currencies, eyeing the upper bound of its range dating back to June. Treasuries are pushing higher, US equity futures are up, and gold prices soared above $4000 per ounce for the first time ever, BBH FX analysts report.

Government shutdown deepens, labor risks mount

"The ongoing US government shutdown continues to see no resolution as both parties remain at an impasse. The longer the US government shutdown lasts, the greater the downside risks to the labor market as the White House raised the specter of a permanent downsizing of federal workers."

"The September New York Fed consumer survey of inflation expectations released yesterday supports the Fed’s gradual easing cycle. Median inflation expectations at the one-year-ahead horizon rose 0.2pts to a five-month high at 3.4% and at the five-year-ahead horizon to 3.0% from 2.9% percent. They remained steady at the three-year-ahead horizon at 3.0%"

"The FOMC September 17-18 meeting minutes is due today (7:00pm London, 2:00pm New York) and will offer more context behind the 'risk-management cut'. We anticipate the Fed to turn more dovish by the time of the December FOMC meeting because restrictive monetary policy can worsen the already fragile employment backdrop and upside risks to inflation are not materializing. Bottom line: USD downtrend is intact."