As can be seen in the chart below of the USDCHF currency pair, the dollar and safe-haven Swiss franc have traded in a volatile range against each other.
The range-bound trade can be attributed to the genuine uncertainty that investors face right now. They know that once a deal is passed, the dollar will have a relief rally, catching those currently short in an unwanted squeeze position.
But until that point, no one wants to be long dollar either, due to uncertainty but also the general weakness caused by continued monetary stimulus from the Federal Reserve.
Due to the difficult decision at hand regarding currency markets, expect very little conviction in moves long or short until the U.S. government resolves its issues or defaults on its debt.
The dollar's volatile sideways trade has pushed funds into foreign equities such as iShares MSCI EAFE and iShares China Large-Cap shown below.
Europe is perceived as the safer of the two economies right now between itself and the United States.
For this reason European currencies and equities have shown relative strength against all U.S. assets in recent weeks.
An interesting development on Monday was the breakaway strength of Chinese equities.
The index below highlights the strong uptrend from the week of October 7th till now.
Chinese economic data Friday night showed that exports vastly underperformed expectations. The hope for Chinese economic policy reform, however, boosted the Shanghai equity market Monday.
Coming up short on exports set China up to drop in U.S. markets Monday morning, which it did initially, but due to the lack of a debt deal, foreign markets received the strongest bid.
After the brief fall, the Chinese equity ETF rallied the entire day.
This highlights the potential damage U.S. assets could face with a perceived geopolitical risk environment in Washington.
As long as U.S. politicians remain a liability, foreign assets will strengthen and the U.S. dollar will be sold versus other currencies.
At the time of publication the author had no position in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.