Tokyo: The U.S. dollar eased slightly in early Monday trading as growing optimism that the ongoing federal government shutdown might soon come to an end improved global investor sentiment. Despite lingering concerns over the slowing pace of economic growth, traders showed cautious confidence that a political compromise in Washington could avert prolonged fiscal damage.
Recent market movements reflected this dual sentiment. The dollar index, which measures the U.S. currency against six major peers, slipped around 0.1% to 99.64, signaling softer demand for the greenback. Investors appeared to balance their fears of economic stagnation with hopes that a resolution in Congress could stabilize markets and reopen key government services before the mid-November deadline.
The latest U.S. consumer sentiment report revealed a steep drop to its lowest level in more than three years, underlining how the shutdown has shaken household confidence. Many Americans have expressed frustration as delayed paychecks and suspended services ripple through the economy. Economists warn that a prolonged shutdown could weaken growth prospects and disrupt the upcoming holiday shopping season, traditionally a major driver of U.S. economic activity.
However, optimism was rekindled after reports emerged that the U.S. Senate had advanced a temporary funding bill to keep the government open through January. Prediction markets placed the likelihood of the shutdown ending before November 15 at nearly 92%, marking a sharp increase in confidence compared to last week.
While the overall dollar index weakened, not all currencies moved in the same direction. The U.S. dollar rose slightly against the Japanese yen, trading near ¥153.80. Analysts attributed this to recent remarks by Japanese Prime Minister Sanae Takaichi, who signaled a willingness to pursue flexible fiscal policies to stimulate domestic demand. This stance dampened the yen’s traditional safe-haven appeal and gave the dollar a mild upward push in that pair.
The euro hovered near $1.1559, while the British pound traded around $1.3148, both showing minor dips. Meanwhile, the offshore Chinese yuan remained relatively stable at 7.1204 per dollar, reflecting a cautious mood in Asian trading floors.
In bond markets, U.S. Treasury yields rose modestly as investor demand for safe assets waned slightly amid hopes for a political breakthrough. The benchmark 10-year Treasury yield climbed to 4.1356%, up from 4.093% on Friday. Analysts noted that while investors welcomed signs of progress in Washington, many remained wary of inflationary pressures and the Federal Reserve’s next move.
Market expectations for a 25-basis-point rate cut at the Fed’s December 10 meeting dipped slightly from 67% to 63% as investors re-evaluated whether policymakers would maintain their cautious stance or respond to weakening data with early easing.
Across Asia, traders are closely monitoring the situation in the U.S. due to its influence on export flows, capital movement, and regional exchange rates. Economists at Standard Chartered Bank warned that global liquidity, which supported asset prices throughout 2025, could tighten in 2026, potentially strengthening the dollar in the medium term.
In addition, signs suggest that Asia’s export boom fueled partly by front-loaded shipments to avoid tariffs may be fading. With most regional central banks nearing the end of their rate-cut cycles, capital inflows into Asian assets could slow, reinforcing the dollar’s long-term dominance despite its current dip.
A softer dollar often brings short-term relief for emerging economies such as India, where currency depreciation pressures and import costs can intensify during dollar rallies. For India, a temporarily weaker dollar could stabilize the rupee and ease energy import bills, offering some fiscal breathing space. However, if the dollar regains strength once the shutdown ends and global liquidity tightens, these benefits could prove short-lived.
The week opens with a cautious sense of relief in global markets. While the dollar’s decline suggests that investors anticipate political resolution in Washington, the underlying fragility of the U.S. economy remains evident. The interplay of domestic politics, consumer confidence, and monetary expectations continues to shape market behavior.
Should the U.S. Congress succeed in ending the shutdown swiftly, risk appetite could rise, fueling temporary gains in global equities and emerging-market currencies. Yet the broader narrative remains uncertain one where fiscal brinkmanship, slowing global growth, and tightening liquidity could quickly tip optimism back into anxiety.