The United States dollar slipped on Monday as traders reacted to renewed fears of a partial government shutdown and awaited key economic data that could shape Federal Reserve policy. The dollar index fell 0.22 percent to 97.90 after gaining 0.5 percent last week, while the Japanese yen outperformed on investor expectations of tighter Bank of Japan policy.
Markets remain cautious with investors pricing in forty basis points of United States Federal Reserve rate cuts by December, a slight reduction from earlier forecasts. Analysts warned that a prolonged government shutdown could delay critical economic releases such as non-farm payrolls, disrupting the market’s ability to gauge the central bank’s next moves.
Beyond shutdown concerns, traders are also watching the legal battle over Federal Reserve Governor Lisa Cook’s possible removal, a development seen as a greater risk to monetary stability. The euro gained 0.25 percent to trade at 1.1729 dollars, sterling rose 0.34 percent to 1.3445 dollars, while the Australian dollar advanced ahead of the Reserve Bank of Australia’s policy decision.
