Dollar Finds Stability Amidst Shutdown and Policy Uncertainty

The U.S. dollar showed signs of recovery in Asian markets on Thursday following the announcement that the U.S. Supreme Court will review a case concerning the removal of Federal Reserve Governor Lisa Cook in January. This move temporarily sees her remain in her position.

The independence of the Federal Reserve, a significant concern for the market, takes a backseat for now, noted Sydney's IG market analyst Tony Sycamore. The dollar index slightly rose by 0.1% to 97.80 after a series of losses, as traders weighed the prolonged U.S. government shutdown's impacts on economic data.

The current hiatus in market-shifting data, according to Sycamore, signals a pause until October 13. The ongoing shutdown has stalled key federal economic data at a time of political and economic division. A Polymarket analysis predicts a one to two-week shutdown duration, with an active betting pool nearing $1 million. Investor attention is now directed toward private payroll reports, due to the unavailability of the Labor Department's September employment report.

Meanwhile, U.S. manufacturing saw slight positives in September, despite challenges from tariff impacts. As speculation around the Federal Reserve's future policies mounts, the market is nearly certain of a 25-basis-point interest rate cut at the October meeting.

Investors have been retreating from the dollar, favoring gold, which slightly declined to $3,857.09 per ounce. Despite the dollar's minor movements with the yen and yuan, Chinese markets remain closed for the Golden Week holiday. Sterling and the Australian dollar showed minimal changes in early trading.

(With inputs from agencies.)