Investing.com - The dollar softened against the yen on Tuesday after a U.S. government shutdown sparked talk the Federal Reserve may continue to stimulate the economy with its monthly bond purchases, though gains were muted as many viewed the fiscal impasse as temporary.
In U.S. trading on Tuesday, USD/JPY was trading at 97.89, down 0.34%, up from a session low of 97.66 and off a high of 98.73.
The pair was likely to find support at 97.50, Monday's low, and resistance at 99.14, Thursday's high.
The U.S. Congress on Monday failed to agree on a spending package due to conflicts over President Barack Obama's healthcare reform law, which prompted a partial government shutdown that began Tuesday, though many began to view the impasse as short-lived by afternoon trading.
Market talk continued to persist that the Federal Reserve will keep its monthly USD85 billion bond-buying program in place to offset any damage the shutdown may inflict on recovery, though it failed to send investors fleeing the greenback in panic.
Fed asset purchases weaken the dollar by driving down interest rates to spur recovery, though solid economic indicators solidified expectations that Fed stimulus measures will begin taper soon, likely this year, which gave the dollar some support.
The Institute for Supply Management reported earlier that its manufacturing purchasing managers’ index rose to 56.2 in September from 55.7 in August.
Analysts had expected the index to decline to 55.0.
On Monday, the Federal Reserve Bank of Dallas reported that its general business activity index increased to 12.8 in September from 5.0 in August, beating market calls to remain unchanged.
Separately, industry data revealed that Chicago purchasing managers' index hit 55.7 in September from 53.0 in August, beating analysts' calls for a 54.0 reading
The yen, meanwhile, was up against the pound and up against the euro, with GBP/JPY down 0.26% and trading at 158.55 and EUR/JPY trading down 0.31% at 132.43.
On Wednesday, the U.S. is to release the ADP report on nonfarm payrolls, which is often seen as a precursor to the closely watched government report on Friday.
In U.S. trading on Tuesday, USD/JPY was trading at 97.89, down 0.34%, up from a session low of 97.66 and off a high of 98.73.
The pair was likely to find support at 97.50, Monday's low, and resistance at 99.14, Thursday's high.
The U.S. Congress on Monday failed to agree on a spending package due to conflicts over President Barack Obama's healthcare reform law, which prompted a partial government shutdown that began Tuesday, though many began to view the impasse as short-lived by afternoon trading.
Market talk continued to persist that the Federal Reserve will keep its monthly USD85 billion bond-buying program in place to offset any damage the shutdown may inflict on recovery, though it failed to send investors fleeing the greenback in panic.
Fed asset purchases weaken the dollar by driving down interest rates to spur recovery, though solid economic indicators solidified expectations that Fed stimulus measures will begin taper soon, likely this year, which gave the dollar some support.
The Institute for Supply Management reported earlier that its manufacturing purchasing managers’ index rose to 56.2 in September from 55.7 in August.
Analysts had expected the index to decline to 55.0.
On Monday, the Federal Reserve Bank of Dallas reported that its general business activity index increased to 12.8 in September from 5.0 in August, beating market calls to remain unchanged.
Separately, industry data revealed that Chicago purchasing managers' index hit 55.7 in September from 53.0 in August, beating analysts' calls for a 54.0 reading
The yen, meanwhile, was up against the pound and up against the euro, with GBP/JPY down 0.26% and trading at 158.55 and EUR/JPY trading down 0.31% at 132.43.
On Wednesday, the U.S. is to release the ADP report on nonfarm payrolls, which is often seen as a precursor to the closely watched government report on Friday.