Asian currencies edged higher on Monday, while the dollar weakened as investors exercised caution ahead of a deadline that could see the U.S. government temporarily shut down.
Market participants also await interest rate decisions from the central banks of Australia and India later this week.
The US Dollar Index, which measures the greenback against a basket of major currencies, edged 0.2% lower, while US Dollar Index Futures also traded down 0.2% as of 04:17 GMT.
US govt shutdown risks in focus Investor caution centered on whether Congress would pass a funding bill by the end of the current fiscal year, as failure to do so would partially close the government starting Wednesday.
Trump is due to convene with top lawmakers later on Monday at the White House in a bid to reach a funding accord before the deadline.
A shutdown would have immediate consequences for financial markets and government operations, including the release of economic data.
A shutdown would delay the release of critical economic data, including the September nonfarm payrolls report scheduled for Friday.
Asia FX gains; RBA, RBI rate decisions due this week Risk appetite in Asia was supported by expectations that a potential lapse in U.S. federal funding could prompt outflows from U.S. assets and provide near-term support to regional currencies.
The Japanese yen’s USD/JPY pair fell 0.4% on Monday, while the Singapore dollar’s USD/SGD edged down 0.1%.
The South Korean won’s USD/KRW pair declined 0.4%, while the Indonesian rupiah’s USD/IDR slipped 0.3%.
The Chinese yuan’s onshore USD/CNY pair ticked 0.2% lower, while the offshore pair USD/CNH fell 0.3%.
The Australian dollar’s AUD/USD gained 0.3%. The Reserve Bank of Australia will hold its policy meeting on Tuesday, with markets widely expecting the central bank to leave interest rates unchanged at 3.6%.
In India, the Reserve Bank of India (RBI) is anticipated to maintain its key policy rate at 5.50% during its upcoming meeting ending on October 1, 2025, although a surprise rate cut is possible.
The Indian rupee’s USD/INR traded flat near record high levels.
