The dollar dipped as investors confronted a potential U.S. government shutdown that would freeze all economic data, including the crucial Friday jobs report. This political impasse threatens to blindside the Federal Reserve ahead of its key policy decisions.
While a short shutdown might be brushed off, a prolonged standoff raises the risk of slower growth and more aggressive Fed rate cuts—a bearish combination for the currency. The dollar index, already down nearly 10% this year, edged lower in early Asian trading.
The situation overshadowed other central bank developments, with the RBA expected to hold rates and the BOJ revealing surprising internal hawkishness, with some policymakers pushing for a near-term rate hike.
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