The dollar declined yesterday ahead of a series of U.S. economic data releases that could clarify the Federal Reserve’s path on interest rates, amid rising risks of a potential U.S. government shutdown.

Currency movements were notably calm during the Asian trading session, despite the dollar losing some of its gains after ending last week higher, supported by reduced bets on interest rate cuts.

The dollar fell 0.4% to 148.94 against the Japanese yen after rising more than 1% against the yen last week.

The euro rose 0.28% to $1.1731, while the British pound increased 0.27% to $1.3439.

The dollar also declined against the Chinese yuan at the start of the new week by 63 pips to 7.1089 yuan per dollar compared to 7.1152 yuan on Friday at the close of last week.

Investor focus was mainly on the imminent U.S. government shutdown if Congress fails to pass a funding bill before the fiscal year ends tomorrow, Tuesday.

Without a funding law, parts of the government will shut down on Wednesday, the first day of the U.S. government’s 2026 fiscal year.

This will have implications for the release of the closely watched nonfarm payroll report on Friday.

A recent series of strong U.S. economic data has sharply reduced expectations for Federal Reserve rate cuts, with markets now pricing in about a 40 basis point easing by December. Regarding other currencies, the Australian dollar rose 0.36% to 0.6571 dollars in its latest trade, while the New Zealand dollar increased 0.26% to 0.5791 dollars.