US dollar lost ground against the Japanese yen on Tuesday, after the US government embarked on a partial shutdown, as Congress did not reach an agreement on the next fiscal year budget.
USD/JPY reached a session low at 97.82 at 7:15 GMT, after which consolidation followed at 97.93, falling 0.30% on a daily basis. Support for the pair was to be found at August 27th low, 96.97, while resistance was to be met at current session high, 98.74.
US government began a partial shutdown today, after policymakers’ debate regarding the budget and President Obama’s healthcare law did not come to an agreement about the endorsement of the new fiscal year funding, starting today. Such a shutdown would cost the United States at least 300 million US per day in lost economic output at the start, according to IHS Inc. That’s a fraction of the country’s 15.7-trillion-USD economy, and the effects probably will grow over time, Bloomberg imparted. During the partial government shutdown, many essential government operations will be ceased. Internal Revenue Service call centers will close, while more than 90% of Environmental Protection Agency workers will stay home. National parks and museums will also be closed. On the other hand, Social Security and Medicare benefits will be paid, while US troops will remain at their posts worldwide and will be paid under a bill President Obama signed on Monday, according to the same media.
Meanwhile, in Japan, a report showed that unemployment rate unexpectedly rose to 4.1% in August from 3.8% in July, while experts had anticipated that the rate will remain unchanged.
Japanese household spending dropped 1.6% in August 2013 compared to August 2012, confounding expectations of a 0.1% uptick, after in July spending rose 0.1%.
In addition, Prime Minister Shinzo Abe said on Tuesday that his government will increase the sales tax rate to 8% from April 1st next year, from the current rate of 5%, in order to achieve a reduction in country’s public debt.
Elsewhere, the yen was steady against the euro, with EUR/JPY cross dipping 0.05% for the day to trade at 132.90 at 8:37 GMT. GBP/JPY pair was gaining 0.04% to trade at 159.09 at 8:39 GMT.
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