Asian currencies strengthened on Monday while the U.S. dollar slipped, as investors remained cautious ahead of a looming government shutdown deadline. Traders are also watching central bank decisions in Australia and India later this week.
The U.S. Dollar Index, which tracks the greenback against six major peers, fell 0.2% in early trading. Dollar Index futures also dipped 0.2% by 04:17 GMT.
U.S. government shutdown risks weigh on sentiment
Markets are focused on whether Congress can pass a funding bill before the fiscal year ends. Failure to do so would result in a partial government shutdown starting Wednesday.
President Donald Trump is scheduled to meet lawmakers at the White House on Monday in an attempt to strike a deal. A shutdown would disrupt government operations and delay the release of key economic reports, including September’s nonfarm payrolls data due Friday.
Asia FX gains on risk flows
Concerns over U.S. funding gridlock supported Asian currencies, as investors shifted some exposure away from U.S. assets.
- The Japanese yen’s USD/JPY pair dropped 0.4%.
- The Singapore dollar’s USD/SGD edged down 0.1%.
- The South Korean won’s USD/KRW pair fell 0.4%.
- The Indonesian rupiah’s USD/IDR slipped 0.3%.
- The Chinese yuan weakened the dollar, with USD/CNY down 0.2% and offshore USD/CNH down 0.3%.
The Australian dollar rose 0.3% ahead of Tuesday’s Reserve Bank of Australia (RBA) meeting. Markets expect the RBA to hold rates steady at 3.6%.
In India, the Reserve Bank of India (RBI) is expected to keep its key policy rate unchanged at 5.50% when it meets later this week, though a surprise cut cannot be ruled out. The Indian rupee traded flat, hovering near record-low levels against the dollar.
