The US dollar index (DXY) hit a year-long high of 94.43 yesterday, but the rally appeared to be starting to slacken today. The America’s bond yields began to stabilize after a week-long rally.

Meanwhile, some market participants were wary of developments in the United States government's budget issues. The greenback faces the risk of a government shutdown.

That is due to the expiration of the USA federal budget on Thursday, as well as the threat of defaulting on their debt on October 18. September 30 marks the end of the federal government's fiscal year.

That is as well as the deadline for the U.S. Congress to pass a budget for the next fiscal year. On Tuesday. The treasury Secretary, Janet Yellen, also warned that Congress must authorize the Treasury Department.

The Laws Legalized by the House of Representative 

The aim is to suspended or raise the United States debt limit by October 18, 2021 if it does not want to default on its debts. There is one more progress to highlight. 

On Wednesday, the House of Representatives passed the legislation that would allow the suspension of the debt limit In the America. However, Republicans in the Senate will almost certainly scuttle their passage.

As a temporary solution to avert a government shutdown, the Senate may seek to reach a bipartisan agreement to provide funding for the federal government through early December. 

However, there are still some big question marks about whether the deal will actually be reached in time. If it was happened, it would only delay the shutdown to the end of the year.

The USD Current Exchange Position

 The situation above has not provided a solution to the threat of defaulting on the America’s debt as well. The USD current exchange rate position is still maintained by the Fed's tapering expectations in the near future.

That is due to the lack of a shutdown or default of the America’s government. However, all eyes will continue to monitor the tug-of-war on the issue in the Congress right now. 

The Government shutdowns are nothing new in the land of Uncle Sam. The shortest one occurred during the era of President Jimmy Carter and President Ronald Reagan.

 Meanwhile, the longest was 35 days in the era of President Donald Trump. Each shutdown resulted in losses of between millions and billions of US dollars Currencies in that time. 

Some Parties Will Not Let the Worst Situation Happened

Meanwhile, the condition above was also resulting in hundreds of thousands of civil servants being laid off. A "new" aspect of this year's budget crisis lies in the emergence of the risk of debt default.

However, the majority of analysts believe that both Democrats and Republicans alike won't let that happen. They may find the solutions to avoid the worst thing happened. 

Ben Kintun as a director of research in the Beacon Police Advisor stated that he sees it (the US default) as a very small chance. The percentage is just really low.

It is although with all the theatrics (in the current Congress), the odds have increased. He believes that several parties will do something in order to fix everything due to this crisis. 

The Worst Scenario

However, it cannot be denied that the worst scenario can occur as well. The default on government debt is clearly able to trigger the quick change and different condition in the future. 

If it really happens, it will turn a contrived political crisis into an economic crisis. (The market's) confidence and trust in the United States will no longer be full like before. 

Nowadays, the jobless claim in that superpower country is rising again which makes the US dollar rally is not that smooth. The data released was quite dissapointing.