Yen Weakens as Markets Await U.S. Shutdown Deal; Risk Currencies Strengthen

The Japanese yen hovered near its weakest level in months on Tuesday as traders awaited progress on a U.S. government shutdown deal, while risk-sensitive currencies like the Australian and New Zealand dollars gained ground against the dollar.

The euro held steady at $1.1558, and the British pound edged up to $1.3177, supported by improved risk sentiment. Hopes grew after the U.S. Senate cleared an initial hurdle on Sunday toward approving a deal to restore federal funding and end the country’s longest shutdown on record. However, uncertainty remained over when Congress would finalize the agreement.

The Australian dollar rose 0.7% to $0.6536, marking one of the session’s biggest moves, while the yen slipped to 154.11 per dollar, nearing a nine-month low. Analysts noted that a break beyond 154.48 would mark the yen’s weakest point since early in the year.

Market experts cautioned that the rally in risk assets could reverse if delays emerge in passing the shutdown bill. “Reopening by November 15 is almost fully priced in, so any setbacks could pose risks to liquidity,” said Brent Donnelly, president of Spectra Markets.

House Speaker Mike Johnson signaled optimism, saying the House could approve the bill as early as Wednesday, sending it to President Donald Trump for his signature if the Senate moves swiftly.

Investors are also monitoring key economic indicators due later in the session, including New Zealand inflation expectations, U.K. wage data, and Germany’s ZEW sentiment survey.

The New Zealand dollar, which has been under pressure amid slowing growth, hit a 12-year low against the Australian dollar, underscoring diverging interest rate expectations between the two economies.

As global markets await clarity on the U.S. fiscal situation, traders remain cautious, balancing risk appetite with safe-haven demand in the currency landscape.