Dollar Dips Amid Shutdown Tensions and Fed Policy Speculation
The dollar fell on Monday due to concerns of a potential U.S. government shutdown. The yen outperformed the euro as investors anticipated U.S. economic data that might influence Federal Reserve policy. Analysts are monitoring both the dollar’s fluctuation and the legal battle over Fed Governor Lisa Cook's potential removal.
On Monday, the dollar experienced a decline amidst fears of an impending U.S. government shutdown. Concerns of political gridlock in Congress contributed to this dip, as the deadline to avert a shutdown looms. This comes on the heels of data that initially increased the odds of interest rate cuts by the Federal Reserve.
As traders keep a close eye on Washington's fiscal maneuvers, the dollar index dipped by 0.14%, following a previous rise. Without congressional approval of a funding bill by Tuesday, parts of the government could cease operations. Historically, such shutdowns have been seen as unfavorable for the dollar, although it often recovers once disputes are resolved.
In the financial world, the legal dispute involving Federal Reserve Governor Lisa Cook has grabbed attention. Analysts consider threats to the Fed's independence as more substantial risks to the dollar's value than the potential shutdown. Meanwhile, inflation data from Europe shows slight rises, although eurozone policy expectations remain stable.
(With inputs from agencies.)
Google News