The US dollar fell to a one-week low after the federal government shutdown began, indirectly adding to market uncertainty and risking a delay in key jobs data. The shutdown came after the Senate rejected a short-term spending measure, with a new vote expected on Wednesday.
The dollar's weakness was accompanied by increased demand for safe-haven assets, including the Japanese yen and gold. However, analysts stressed that it was still unclear whether the yen's strength was due to safe-haven factors or speculation that the Bank of Japan (BOJ) would raise interest rates.
The dollar fell 0.5% to 147.07 yen, while the Swiss franc recovered from an earlier surge, pushing the US dollar up 0.2%. In the US market, the JOLTS report showed job vacancies rose slightly but hiring fell, in line with signs of a softening labor market.
The uncertainty over the government shutdown means official data could be delayed, including Friday's non-farm payrolls report. The Fed is expected to assess its policy decision on October 29, with the market pricing in a 95% probability of a quarter-point rate cut.
Meanwhile, the euro held steady at around $1.1727 despite data showing a contraction in manufacturing activity. Markets are awaiting further developments from the US and Japan, with a 40% chance that the BOJ could raise rates this month.
