The U.S. dollar slipped lower Tuesday, with traders fretting ahead of a looming U.S. government shutdown as well the release of important labor market data.
At 05:25 ET (09:25 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower to 97.442.
U.S. government slowdown looms The clock is ticking towards an impending deadline for U.S. lawmakers to pass a short-term funding bill, with the government set to close should a deal not be reached.
Republican and Democratic leaders blamed each other for an impasse in negotiations following a meeting with President Donald Trump on Monday, and after the gathering, Vice President JD Vance said he now thinks 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.
Crucially, analysts have warned that the shuttering of the government could delay the release of all-important nonfarm payrolls data, which is scheduled to be unveiled on Friday.
This could make the August JOLTs release, a measure of job openings and a proxy for hiring demand, due later in the session, even more important as traders seek guidance surrounding the potential for more interest rate cuts this year.
“Remember the July issue was bad, with job openings dropping and layoffs accelerating,” said ING. “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.”
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. Upside to German CPI In Europe, EUR/USD traded 0.2% higher to 1.1747, after inflation rose in four key German states in September, preliminary data showed on Tuesday, pointing to an increase in national inflation.
National figures will be published later in the session, with analysts expecting a slight rise in harmonised inflation to 2.2% in September from 2.1% the month before.
As Europe’s largest economy, German inflation could give an indication of the developments in eurozone inflation, which is scheduled to be released on Wednesday.
GBP/USD traded 0.1% higher to 1.3345, after data confirmed the U.K. economy grew 0.3% in the second quarter. On an annual basis, Britain’s GDP in the second quarter was 1.4% higher than a year ago, revised up from an initial 1.2% estimate.
Aussie dollar rises after RBA meeting Elsewhere, AUD/USD climbed 0.4% to 0.6606, after the Reserve Bank of Australia held its cash rate steady at 3.60% earlier in the session, as officials opted to wait for clearer signs from inflation and labor market data.
The decision marks a pause after three cuts earlier in 2025 as the RBA balances upside inflation risks against signs of cooling in economic momentum.
USD/JPY fell 0.5% to 147.92, after data showed that Japan’s factory output fell 1.2% in August from the previous month, marking a second straight month of decline and underscoring continued industrial weakness.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. A separate data release showed that Japan’s retail sales declined at its fastest pace in four years, highlighting weak private consumption.
USD/CNY traded marginally higher to 7.1199, after China’s official manufacturing activity shrank for a sixth consecutive month in September, while service sector activity also weakened.
