SINGAPORE (Reuters)
The dollar was under scrutiny on Monday, especially with several upcoming US economic reports that could clarify the Federal Reserve’s interest rate strategies. However, the looming possibility of government shutdowns also captured attention.
Currency changes were relatively muted during early trading in Asia, but the dollar saw a slight dip after gaining ground last week amid speculation of a Fed rate cut.
The dollar dropped by 0.2% to 149.24 after it had surged more than 1% against the yen last week.
Meanwhile, the euro appreciated by 0.15% to $1.1717, and Sterling increased by 0.11% to $1.3418.
Investors were particularly focused on the threat of a US government shutdown, which could Materialize if funding legislation isn’t passed before the fiscal year wraps up on Tuesday. Should the funding act fail, parts of the government could close on Wednesday, which marks the beginning of the US government’s fiscal year 2026.
This shutdown would likely impact the release of the important non-farm payroll report scheduled for Friday.
One analyst noted, “If we are facing a shutdown, it’s reasonable to question the availability of payroll numbers. How do we deal with missing data?”
They added, “The Fed’s next meeting won’t be until late October, so I hope the shutdown doesn’t last too long. It’s crucial that the data is available before then.”
As investors await Friday’s employment figures, they will also receive other important stats, including job openings and the ISM manufacturing PMI, which may provide further insight into the US economy’s trajectory.
Recent solid economic data has pushed back against expectations of aggressive cuts to Fed rates, with the market now predicting a reduction of around 40 basis points by December.
In the currency market, the Australian dollar edged up by 0.15% to $0.6557, while the New Zealand dollar witnessed a 0.07% rise to $0.5780.
The Reserve Bank of Australia is set to announce its interest rate decision on Tuesday, which is anticipated to influence rates set by the central bank.
