Tokyo: The U.S. dollar wavered near a one-week low on Wednesday as the federal government entered a shutdown, raising concerns over delayed economic data releases and increasing market uncertainty. Government funding expired at 0400 GMT after lawmakers from both parties failed to reach a last-minute agreement on an interim spending measure.
President Donald Trump warned that the shutdown could trigger “irreversible” measures, including the suspension of critical federal programs. The lapse in funding is expected to halt the release of key reports from the Labor and Commerce departments, including Friday’s nonfarm payrolls data, which investors rely on to gauge the likelihood of a Federal Reserve rate cut later this month.
In overnight trading, mixed signals from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) further weighed on the dollar. The report indicated a slight rise in job openings for August alongside a decline in hiring, suggesting a softening labor market. With official government data stalled, investors are increasingly turning to private-sector indicators to assess economic conditions.
Market participants are closely watching the potential duration of the shutdown. Traders currently assign roughly a 95% probability to a 25-basis-point Fed rate reduction at the October 29 meeting. Joseph Capurso, head of foreign exchange at Commonwealth Bank of Australia, noted, “The USD will resume its fall if the political discourse suggests an extended shutdown. More weak U.S. economic data can add to the weight on the USD.”
The euro strengthened slightly to $1.1738, while the dollar remained steady at 147.92 yen after a recent 1.2% decline. Japanese investors largely ignored the Bank of Japan’s quarterly “tankan” survey, despite its implications for the central bank’s rate policy. Confidence among major manufacturers improved for the second consecutive quarter, with firms maintaining optimistic spending plans. Analysts noted that the BOJ’s upcoming rate decision will largely depend on its assessment of U.S. economic trends.
As the shutdown continues, global markets remain on alert, reflecting the broader impact of U.S. political gridlock on currency stability and investor confidence worldwide.