Safe-Haven Yen Rises as USD/JPY Slides Amid US Shutdown Concerns

The Japanese Yen maintained its safe-haven appeal on Tuesday, nudging USD/JPY slightly lower for a third consecutive session as worries over a potential US government shutdown weighed on the Greenback. At the time of writing, the pair is trading near 147.769, down just 0.03% from the previous close of 147.807.

Investors largely dismissed Japan’s weak economic activity data released earlier, instead focusing on political uncertainty in Washington. With a critical deadline approaching, the US government faces a potential shutdown starting Wednesday unless lawmakers reach a last-minute agreement. US President Donald Trump warned that “we’ll probably have a shutdown” and indicated that his party “can cut benefits” as part of spending negotiations, adding that “Democrats are taking a risk” by resisting his proposals.

US labor market data offered limited support for the Greenback. Chicago Fed President Austan Goolsbee noted that short government shutdowns typically have minimal economic impact, but cautioned that the overall effect depends on the breadth and duration of the shutdown. He also highlighted that payroll growth is slowing, while other employment indicators remain broadly stable, and warned that potential new tariffs and persistent inflation could create challenges for monetary policy.

Recent US economic releases were mixed. Consumer confidence in September fell to 94.2 from 97.8 in August, while job openings for August rose slightly to 7.23 million from 7.21 million in July, offering little boost to the Dollar.

Looking ahead, market participants are turning to key economic data due later this week. In Japan, the third-quarter Tankan survey is set to provide insights into business sentiment, while in the United States, focus will shift to the ADP Employment Change report and manufacturing PMI readings, which could influence the Dollar’s near-term direction.