Safe haven yen under pressure as traders eye end to US shutdown
The safe-haven yen was pinned near its weakest levels in months on Tuesday while riskier currencies were firm against the dollar, as traders waited to see whether US lawmakers could secure an end to the government shutdown in the coming days.
SINGAPORE: The safe-haven yen was pinned near its weakest levels in months on Tuesday while riskier currencies were firm against the dollar, as traders waited to see whether US lawmakers could secure an end to the government shutdown in the coming days.
The euro was steady at US$1.1558, while sterling has been creeping higher to US$1.3177.
A deal that would restore US federal funding and end the longest shutdown on record cleared an initial Senate hurdle late on Sunday, though it was unclear when Congress would give its final approval.
A gain of about 0.70 per cent for the Australian dollar to US$0.6536 and a drop in the yen to 154.11 per dollar were the biggest moves in the wake of the breakthrough. A break of 154.48 would take the yen to its weakest level in nine months.
Analysts said these moves could be vulnerable to reversal if the path to finalising the shutdown deal drags much beyond this week, as several Senate hurdles remain.
House of Representatives Speaker Mike Johnson said his chamber could pass the bill as soon as Wednesday and send it to President Donald Trump to sign into law, if the Senate acts quickly.
"Reopening by Nov 15 is just about fully priced in for now, so any deviation or delays from that could be viewed as risky for this rebound in liquidity," said Brent Donnelly, president at analytics firm Spectra Markets.
New Zealand inflation expectations, British weekly wage data and Germany's ZEW sentiment survey are due later in the session.
The New Zealand dollar has been under pressure for months as the economy slows, and on Tuesday hit a 12-year low against the Australian dollar, reflecting a divergent outlook for interest rates in the Antipodes.
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