Dollar Retreats Amid Economic Data and Shutdown Fears

The dollar slid against major currencies such as the euro and yen on Monday, impacted by last week's stronger-than-expected U.S. economic data and looming government shutdown threats. Traders anticipate further insights from Friday's nonfarm payrolls report, crucial for mapping the Federal Reserve's future policy direction.

A surge in key economic indicators — including housing, durable goods, and second-quarter GDP revisions — surpassed forecasts, leading to a drastic drop in U.S. jobless claims. These economic insights spurred a reassessment of Fed interest rate cut expectations even as shutdown risks loomed large, with funding set to end at midnight Tuesday.

Concerns over the government's fiscal deadlock were underscored by the Labor Department's confirmation that economic data releases would halt during a shutdown. As the dollar index weakened, analysts anticipate short-term impacts but stress historical trends show limited long-term effects. Market focus remains divided between fiscal policy tensions and global geopolitical developments.

(With inputs from agencies.)