USD/JPY down below 97.50 on Shutdown

The dollar traded at almost a one-month low against the yen as a partial shutdown of the U.S. government delayed a jobs report, clouding the outlook for when the Federal Reserve may reduce stimulus.

The Bloomberg U.S. Dollar Index reached the lowest level in two weeks as Atlanta Fed President Dennis Lockhart said the shortage of economic news “would tend to make me somewhat more cautious” about reducing the pace of bond purchases. Lawmakers also need to agree on raising the debt limit. The pound fell against most its 16 major counterparts on speculation recent gains were excessive. Australia’s dollar rose on bets the central bank will refrain from cutting interest rates.

“The longer the shutdown lasts, the bigger economic impact it has,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a telephone interview. “The debt-ceiling issue is potentially much more disruptive for the financial markets. Because the dollar already had a weak September, short positions started building up. They built up a little bit more this week.” A short refers to a bet that an asset will fall.


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