Dollar Dips Amid Post-Shutdown Uncertainty and Global Currency Shifts

The U.S. dollar declines post-government shutdown, as questions linger on economic impacts. Federal Reserve officials express mixed views on monetary policy. The euro strengthens, while the yen faces pressure from its weakness. Global currencies face shifts, with financial markets closely watching upcoming data releases.

The U.S. dollar took a hit on Thursday as the government reopened after a lengthy shutdown, leaving traders uncertain about the currency's long-term trustworthiness. The shutdown, the longest in U.S. history, disrupted air traffic, cut food assistance, and affected over a million unpaid workers.

Federal Reserve officials expressed differing opinions on monetary policy. San Francisco Fed President Mary Daly noted a balance in risks to price stability and employment, while Minneapolis' Neel Kashkari cited mixed signals with inflation and labor market pressures. Cleveland Fed's Beth Hammack advocated for restrictive interest policy to counter inflation. Meanwhile, St. Louis Fed's Alberto Musalem suggested policies are nearing neutrality.

The dollar index fell 0.35% against major currencies, with the euro hitting a high not seen since October. European officials are weighing alternatives to U.S. Federal Reserve backstops. The yen weakened against the dollar and euro, prompting concerns over potential rate hikes. Other global currencies, including the pound and Australian dollar, showed various reactions to new data.

(With inputs from agencies.)