http://www.theforexnittygritty.com/forex/usd-is-no-longer-a-safe-haven
USD Is No Longer a Safe Haven Currency
The US dollar, USD, has long been considered a safe haven currency along with the Euro, Japanese Yen, and Swiss franc. That has been because of the strength and stability of the US economy and its political institutions. Now political game playing continues on Capitol Hill and a government shutdown appears certain. In another couple of weeks the United States government could default in its debts. Many would say that the USD is no longer a safe haven currency. The fundamental analysis of Forex pairs tells us that the USD is at its worst against the Swiss franc in eighteen months and the worst against the Yen in a month. Apparent many agree that the USD is no longer a safe haven. But how about trading foreign currencies and not investing in them? Volatile markets often promise the best profits so how about trading the US dollar during a government shutdown?
What Is Going on and What Is Next?
Most traders believe that a temporary shutdown will hurt the US dollar but not very much. A longer term government shutdown might be more damaging. If congress does not raise the government debt ceiling and the US defaults on its debts that could cause harm to the economy and result in a substantial slide of the USD. Shutting down the government reduces the US economy by about half a percent per month. That figure assumes that a month is all it will take to bring sense back into the equation. If the debt ceiling is not raised government spending cuts will occur. Government spending cuts on the level of a four percent drop in the Gross Domestic Product will occur. If the US government defaults on its debts the US dollar will likely plummet. Indeed the USD is no longer a safe haven currency! Along the way technical analysis of Forex pairs to tap into evolving market sentiment could be very profitable. Just do not bank your profits in dollars.