Dollar Dips Amid Fed Rate Cut Speculation and U.S. Shutdown

The dollar has dropped to nearly a one-week low, reacting to a U.S. government shutdown and underwhelming job data that have raised expectations for additional Federal Reserve interest rate cuts. The dollar index slipped 0.14% to 97.59 as it faced particular challenges against the Japanese yen, which rose 0.3% to 146.69 against the greenback.

With the dollar index declining for four consecutive days, traders are gauging how prolonged the U.S. shutdown could affect economic reports and influence the Federal Reserve's policy decisions. The recent ADP National Employment Report indicating a decrease of 32,000 in U.S. private jobs last month has compounded pressure on the dollar.

The shutdown has disrupted the release of crucial federal economic data during this period of political division, complicating market reactions. The expectation of two more interest rate reductions by the Fed this year remains as market participants closely monitor inflation trends in the eurozone, which are supporting the European Central Bank's current monetary stance.

(With inputs from agencies.)