Asian currencies and the U.S. dollar traded mostly subdued on Thursday as investors assessed the impact of the U.S. government shutdown. Markets also reacted to South Korea’s higher inflation data and Australia’s weaker trade figures.
The U.S. Dollar Index, which tracks the greenback against six major peers, was flat after four straight sessions of losses. Dollar Index Futures edged 0.1% higher as of 04:32 GMT.
U.S. Shutdown Concerns and Safe-Haven Demand
The U.S. government entered a partial shutdown on Wednesday after lawmakers failed to reach a funding agreement. As a result, key economic data releases, including the September nonfarm payrolls, have been delayed.
Analysts warn the shutdown could last longer than usual, raising uncertainty about the Federal Reserve’s ability to monitor the economy. This situation pressured the dollar and increased demand for safe-haven assets such as gold.
ING analysts noted that currency market moves remain modest for now. However, they expect the Japanese yen could benefit as a hedge during the prolonged shutdown. The USD/JPY pair stayed flat on Thursday, following four consecutive days of declines.
Asian Currency Moves
The Singapore dollar’s USD/SGD pair edged 0.1% higher, while the South Korean won’s USD/KRW was unchanged.
South Korea’s consumer price inflation rose in September, matching expectations. Still, analysts believe the rebound will not stop the Bank of Korea from continuing rate cuts.
The offshore Chinese yuan (USD/CNH) inched 0.1% higher, with mainland markets closed for holidays.
The Australian dollar (AUD/USD) was steady after data showed the August trade balance fell more than expected, driven by weaker exports.
Meanwhile, the Indian rupee (USD/INR) gained 0.1%, holding near last month’s record lows. The Reserve Bank of India kept its benchmark interest rate unchanged at 5.5% on Wednesday.
