The US dollar held steady on Tuesday despite concerns of a looming government shutdown, which could delay a key monthly jobs report this week. The potential shutdown is expected to halt official data releases, including the Federal Reserve's key non-farm payrolls report.
The uncertainty has increased the risk of market volatility, with investors expecting at least one more US interest rate cut this year. The US dollar index has fallen nearly 10% so far this year, and today was down 0.1% at 97.82, weighed down by domestic political pressures.
In currency markets, the Japanese yen strengthened against the US dollar after the Bank of Japan discussed a possible rate hike by December. The strategy of selling the dollar against the yen has become increasingly popular as the pair has historically been weak during government shutdowns.
The Australian dollar rose 0.5% after the Reserve Bank of Australia kept its lending rate unchanged, while warning that third-quarter inflation could be higher than expected. The country's economic outlook remains uncertain.
In Europe, the British pound was little changed despite data showing slower GDP growth and a widening current account deficit. The euro rose slightly against the pound and dollar, signaling moderate strength in the single currency bloc.
