The U.S. dollar appreciated against the safe-haven yen and the growth-sensitive Australian dollar on Tuesday, as investors adopted a more cautious stance on risk and redirected their attention to forthcoming data anticipated after the conclusion of the U.S. government shutdown. In early Asian trade, the yen reached its lowest point since February, while the risk-sensitive Australian dollar remained stable against the US dollar. Recently, risk-sensitive currencies, including the Australian dollar and British pound, have appreciated, whereas safe-haven currencies like the yen have weakened. This shift is attributed to increasing optimism for a swift resolution to the U.S. government shutdown, which has enhanced the appetite for risk. Market participants anticipate that the U.S. closure will conclude within the next few days, following the U.S. Senate’s approval on Monday of a compromise aimed at restoring funding for federal agencies, thereby delaying President Donald Trump’s initiative to reduce the federal workforce.

A robust series of economic indicators will provide greater insight into the trajectory of the U.S. economy and the direction of Federal Reserve policy. “Our expectation is that the economy is holding up nicely, and inflation is passing through in a quite moderate way,” stated Isabelle Mateos y Lago suggesting that this scenario should enable the Fed to implement a 25 basis point cut in December and adopt a more cautious approach as we move into 2026. “Our analysis of the economy indicates that we remain in a low-hire, low-fire mode, with no significant indicators of stress. However, let’s analyze what the data indicates,” she remarked. The agreement to conclude the shutdown is now proceeding to the House, where Speaker Mike Johnson has indicated his intention to expedite its passage as early as Wednesday, subsequently forwarding it to President Donald Trump for his signature into law.

“There will be little sense of direction in the coming days: reopening prospects allow markets to price out the negative growth impact, but a resumption of data releases in the U.S. does carry non-negligible downside risks to the dollar,” said Francesco Pesole. “It is our assessment that the markets are not fully accounting for the potential downside risks associated with the labor market, U.S. front-end rates, and consequently, the dollar as we approach year-end,” he added. The euro remained relatively stable at $1.1555. “The bottom line is that the end of the government shutdown will help avoid a more severe gross domestic product and corporate earnings slowdown,” stated Thierry Wizman. Sterling declined by 0.40% to $1.3126 following the release of data indicating a significant cooling in Britain’s labour market during the third quarter.

The dollar increased by 0.10% to 154.28 against the yen, following a peak of 154.495, marking the highest level since February. The yen faced downward pressure following remarks from Japan’s new Prime Minister Sanae Takaichi, who urged policymakers to adopt a gradual approach to interest rate increases, coinciding with a more cautious stance from U.S. policymakers regarding additional cuts. The greenback declined by 0.25% to 0.6520 against the Australian dollar, interrupting a two-day upward trend. The Swiss Franc appeared poised for its fourth consecutive daily increase following Trump’s announcement that the U.S. was collaborating with Switzerland on a strategy to reduce the 39% tariff rate.