Dollar's Rebound Amid U.S. Government Shutdown Concerns

The U.S. dollar strengthened against both the euro and yen on Thursday, recovering from a four-day losing streak against the Japanese currency. The rally comes as market participants weigh the implications of a potential U.S. government shutdown on key economic data, including the closely monitored September jobs report.

Eric Theoret, FX strategist at Scotiabank, noted the market's increased anxiety in the face of uncertain data due to the government shutdown. Traders are focusing their attention on political headlines, with discussions in Washington being a critical driver of currency movements.

Amid the fluctuating currency markets, Kit Juckes of Societe Generale highlighted the tempered market reaction to data, noting skepticism over less reliable figures. With a Federal Reserve interest rate cut widely anticipated in October, and another expected in December, the dollar shows resilience. Meanwhile, attention shifts to Japan's political elections, which could inform fiscal policy impacts on the yen.

(With inputs from agencies.)