(MENAFN- Seven Media) Dubai, UAE, 11 November 2025: The absence of most macroeconomic data releases out of the global economy’s leading character means that it has been more difficult than usual to ascertain where we stand. The ongoing US government shutdown is now the longest in US history, with betting platform Kalshi now suggesting that it could extend to an unprecedented 49 days.

Roman Ziruk, Senior Market Analyst at Ebury, said“ “With most of the key data releases delayed, economic clarity is fading, and investors have no choice but to make do with scattered pieces of official news, all while at the mercy of private data providers. For now, the Fed can manage without possessing a holistic view on the state of the economy and, notwithstanding the uncertainty created by the shutdown, lowered rates again at its October meeting. Our base case remains for another cut in December, but Po’ell’s admission that this was not set in stone suggests that the bank may not be locked into autopilot to the extent that we had previously bel”eved.”

News of the one-year trade truce between the US and China has elicited a sigh of relief among investors. We see the deal as not“only a ”win-win” for both sides, but for the global economy. At least for now, the agreement should dodge another potentially ugly and prolonged period of tit-for-tat tariffs that may have had serious implications for both global growth and financial markets. We are tempering our optimism, however. A number of key sticking points remain, and the truce itself lacks details, while marking merely the first initial step on a long road towards achieving a full trade agreement. The market reaction has been muted thus far, but we could see “ period”of “risk-on” trading once the dust has settled.

In G10 FX, the dollar topped the performance tracker, as investors brushed aside the federal closure risks in favour of easing US rate cut expectations and the improvement in US-China trade relations. The big two underperformers, meanwhile, were the Japanese yen and the British pound. The yen has been hit hard since the election victory for Sanae Takaichi, with investors fearful that her expansionary fiscal plans could both exacerba’e the country’s debt problems and delay Bank of Japan rate hikes. Sterling fared slightly better, but still fell to its lowest level on the euro since May 2023 amid rising Bank of England rate cut bets and heightened concerns over the state of Britain’s public finances – – more on that shortly.

But, what are the main factors that could drive volatility in currency markets this month?

US government shutdown continues to drag on
So far the dollar has held up very well, which we largely attribute to the fact that markets believe that the economic hit due to the closure will be limited. As the old adage goes, no news may be viewed as good news, and the lack of additional sub-par domestic data releases, particularly on the state of the US jobs market, could also be working in favour of the dollar.

We are not particularly convinced that this pattern will hold the longer the shutdown drags on, however. A court order has halted worker layoffs, but hundreds of thousands of federal employees are still yet to receive their paychecks. Additional disruption is expected the longer the closure lingers on. For one, SNAP (food) benefits, which some 41 million Americans rely on, are reduced in November and experience delays. The uncertainty created by the absence of official data should, in theory, also be a dollar negative.

The race to be named the next Fed Chair hots up
Attention among market participants is slowly but surely shifting toward the question of who will replace Powell when his term draws to a close in May next year. Trump loyalist Kevin Hassett (36%) now appears to be the frontrunner, having leapfrogged Christopher Waller (18%) and Kevin Warsh (17%) in the race according to Polymarket. Interestingly, the discussion has changed to an extent, with the Trump administration advocating not only lower interest rates, but a remodelled, leaner Fed.

While Hassett himself has not vocalised what his plans would be, should he indeed be named as the next chair, his stance towards monetary policy appears very much align with President T’ump’s. In September, Hassett publicly welcomed the start of t’e Fed’s easing cycle, saying that i“ was a “good ”irst step”, having previously criticised the Fed for not moving quicker with easing. So w“ile not a” “uber dove”, he seems to land more towards the dovish end of the spectrum than his fellow candidates, meaning that the dollar could come under some pressure should his lead in the bookies continue to advance.

UK braces for make-or-break Autumn Budget
This year’s autumn budget, to be unveiled on 26th November, is set to be a significant risk event for the pound. Chancellor Reeves has a tough task on her hands, as she needs to both convince markets that she has a credible plan to meet the fiscal targets and limit the hit to private sector growth. Amid weak projections for both growth and productivity, high inflation, the sharp increase in borrowing costs, and an inability of the government to deliver modest welfare spending cuts, further tax hikes are a certainty, but the devil will be in the details.

Our expectation is that we will see an amalgam of tax increases that will plug the bulk of the fiscal gap. The no-brainer is an extension to the freeze in the income tax thresholds, which would be the most palatable for markets and least damaging for the economy. Beyond then, it's almost anyo’e’s guess. Changes to “he “big”three” (income tax, NICs and VAT) would raise the most revenue, but would be the most damaging to the economy. Further modest borrowing increases will be considered, but markets will be baying for spending cuts, even if this only yields relatively mild savings.

Not only would a tax-heavy, anti-growth budget almost certainly be perceived as bearish for the pound in of itself, but it could also force the Bank of England into cutting the base rate again at its December meeting. The MPC will be meeting on 6th November, but we do not expect a change in rates just yet, even if we see a handful of the doves vote in favour of an immediate cut.

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