The Japanese Yen, often seen as a safe-haven currency, fell to its weakest level since February on Tuesday, while other risk-sensitive currencies strengthened against the Dollar as markets looked ahead to a resolution of the prolonged US government shutdown.
The Euro held steady around $1.1555, and the British Pound continued its gradual rise to $1.3165 at the time of writing.
On Monday, the US Senate approved an agreement to reinstate federal funding, bringing an end to the record-breaking shutdown.
The measure now moves to the House of Representatives, where Speaker Mike Johnson has indicated he aims to approve it as early as Wednesday before sending it to President Donald Trump for his signature.
Since the Senate made progress with Sunday’s vote, the most notable currency shifts have been a roughly 0.7% rise in the Australian Dollar to $0.6536 and a decline in the Yen, as currency movements reflected the improved appetite for risk, Reuters reports.
The Australian Dollar later gave up part of its earlier gains, holding at $0.6520 by the afternoon in Asia.
Meanwhile, the Yen continued to weaken, weighed down by comments from Japan’s new Prime Minister, Sanae Takaichi, who urged a gradual approach to raising interest rates, contrasting with the more cautious stance in the United States toward additional rate cuts.
Markets had anticipated US and Japanese interest rates would move closer together, but that alignment isn’t unfolding as cleanly or as predicted. It’s possible that investors holding long Yen positions are now starting to close them out.
Elsewhere, a survey earlier indicated that New Zealand’s inflation expectations remained muted in the fourth quarter, reinforcing expectations of an upcoming cut to the official cash rate later this month.
The New Zealand Dollar, already weighed down by a slowing economy, slipped another 0.2% to $0.5635 on Tuesday, hovering near a seven-month low.
It also fell to its weakest level in 12 years against the Australian Dollar on Monday, underscoring the growing divide in monetary policy prospects between the two countries.