The U.S. dollar slipped on Tuesday as markets grappled with the dual pressures of a potential government shutdown and key upcoming labor data.
By 05:25 ET (09:25 GMT), the Dollar Index, which measures the greenback against six major currencies, was down 0.2% at 97.442.
U.S. Government Shutdown Looms
With the deadline for passing a short-term funding bill approaching, the risk of a government closure is increasing. Lawmakers from both parties have traded blame over the stalemate following a Monday meeting with President Donald Trump. Vice President JD Vance said he now believes the government is “headed to a shutdown.”
“The dollar has suffered from rising risk of a U.S. government shutdown and falling oil prices since the weekend,” said analysts at ING in a note.
Analysts also warn that a shutdown could postpone the release of crucial nonfarm payrolls data scheduled for Friday. This elevates the importance of today’s August JOLTs figures, a key indicator of job openings and hiring demand, as traders seek signals for potential interest rate cuts later this year.
“Remember the July issue was bad, with job openings dropping and layoffs accelerating,” ING added. “Today’s numbers can be quite impactful on the dollar, which now has a more balanced positioning and embeds a less pessimistic macro view compared to a couple of weeks ago….this means downside risks for the dollar.”
German CPI Offers Upside
In Europe, EUR/USD rose 0.2% to 1.1747 after preliminary data indicated rising inflation in four major German states during September. Analysts expect harmonized national inflation to edge up to 2.2% from 2.1% last month. As Europe’s largest economy, Germany’s inflation figures may signal broader eurozone trends, with full data due Wednesday.
GBP/USD gained 0.1% to 1.3345, supported by U.K. GDP growth of 0.3% in Q2 and a revised annual growth rate of 1.4%, up from the prior estimate of 1.2%.
Aussie Steady After RBA Hold
AUD/USD climbed 0.4% to 0.6606 after the Reserve Bank of Australia kept its cash rate at 3.60%, pausing after three cuts earlier in 2025. Officials said they prefer to await clearer inflation and labor market signals.
USD/JPY dropped 0.5% to 147.92 after August data showed Japan’s factory output fell 1.2% for the second consecutive month, reflecting ongoing industrial weakness. Separate figures also revealed the fastest decline in Japanese retail sales in four years.
USD/CNY edged slightly higher to 7.1199 following China’s report that manufacturing activity contracted for a sixth straight month in September, with the service sector also showing weaker activity.
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