The dollar hovered near a one-week low versus major peers on Wednesday as the U.S. government headed towards a likely shutdown, which would delay the release of crucial jobs data.
Romain Costaseca | Afp | Getty Images
The dollar hovered near a one-week low versus major peers on Wednesday as the U.S. government headed towards a likely shutdown, which would delay the release of crucial jobs data.
Government funding expires at midnight on Tuesday in Washington (0400 GMT) unless Republicans and Democrats agree to a last-minute interim deal.
The dollar index, which gauges the currency against six counterparts including the euro and yen, stood at 97.869 as of 0003 GMT, and fell as low as 97.633 overnight for the first time since last Wednesday.
U.S. President Donald Trump warned congressional Democrats on Tuesday that letting the federal government shut down would allow his administration to take “irreversible” actions including closing programs important to them.
The U.S. Labor and Commerce departments said their statistics agencies would halt data releases in the event of a partial shutdown. That includes Friday’s scheduled nonfarm payrolls release, which is seen by markets as key in determining whether a Federal Reserve interest rate cut is likely at the end of this month.
Overnight, a mixed reading for the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, or JOLTS, pressured the dollar. The report showed U.S. job openings increased marginally in August while hiring declined, consistent with a softening labour market.
In the absence of official data, more emphasis will fall on private-sector economic indicators.
“The USD will resume its fall today if the political discourse suggests an extended shutdown,” said Joseph Capurso, head of foreign exchange at Commonwealth Bank of Australia.
“More weak U.S. economic data can add to the weight on the USD,” he added.
The euro was flat at $1.1731, after rising to the highest since September 24 at $1.1762 on Tuesday.
The dollar edged up 0.1% to 148.15 yen, following a three-day 1.2% slide.
Traders largely ignored the release of the Bank of Japan’s quarterly “tankan” corporate sentiment survey on Wednesday, even though central bank policymakers had flagged it as key to determining the timing of a resumption of rate hikes.
BOJ officials have tilted more hawkish in recent days, including formerly dovish board member Asahi Noguchi, who said on Monday that the need for policy tightening was increasing “more than ever.”
BOJ Deputy Governor Shinichi Uchida and Governor Kazuo Ueda are due to give speeches on Thursday and Friday, respectively.
Traders currently lay 39% odds on a quarter-point rate increase in Japan on October 30, according to LSEG data.
A quarter-point cut by the Fed a day earlier is considered a near certainty at around 97%.
