U.S. Partial Government Shutdown Weighs on Asian Currencies, Markets Steady Amid Central Bank Actions

Asian currencies and markets showed muted and cautious movements amid concerns over the partial U.S. government shutdown, which began after lawmakers failed to agree on a stopgap funding measure. The shutdown raised uncertainty about the Federal Reserve's ability to assess economic conditions and delayed key economic data releases, including the U.S. nonfarm payroll report, prompting subdued trading in the U.S. dollar and increased demand for safe-haven assets. Despite the shutdown concerns, regional equities, such as in the Philippines, Malaysia, South Korea, and Taiwan, showed resilience and gains, partly driven by optimism around AI-related sectors and strong domestic investor sentiment. The Australian dollar gained following the Reserve Bank of Australia's decision to hold interest rates steady, while other Asian currencies including the Japanese yen, South Korean won, and Singapore dollar remained relatively stable. Economic data from Asia painted a mixed picture, with South Korea's inflation rebounding modestly and Japan and China showing signs of economic contraction or slowdowns. Overall, investors remain cautious but markets have so far seen limited adverse reaction to the U.S. shutdown, focusing on regional economic drivers and central bank policies.