Dollar Stumbles Amid U.S. Shutdown; Eyes on Japan's Leadership Election

The dollar is set for its steepest decline since July, affected by uncertainties stemming from the U.S. government shutdown. In contrast, the yen pulled back from this week's highs as financial markets focused on the Bank of Japan's upcoming decisions, further influenced by a major political event.

Market analysts, including Michael Brown from Pepperstone, indicated that the absence of crucial U.S. economic data is resulting in sluggish trading. Meanwhile, the Japanese yen experienced fluctuations ahead of a key leadership election in the Liberal Democratic Party, which is pivotal for Japan's monetary policy direction.

Attention remains on central bank policy discussions worldwide, with the Federal Reserve expected to cut interest rates further this year. Comments from influential officials suggest monitoring the global economic environment closely, impacting key economies like those of Japan and the United States.

(With inputs from agencies.)