Forex – Dollar Retreats as Fears of Government Shutdown Grow – The dollar traded sharply lower against a basket of major currencies amid renewed fears of a US government shutdown prompting traders to pile into safe heaven yen.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.35% to 90.33.

Senate majority leader Mitch McConnell was preparing contingency plans for the growing possibility of a government shutdown, Politico reported, citing two Republican sources.

The report sparked risk-off sentiment as traders piled into safe haven currencies like the yen and Swiss franc, adding downward pressure on the greenback.

fell 0.32% to Y110.95, while fell 0.64% to 0.9595.

Investor fears over a government shutdown come as traders mulled over the release of a trio of reports the labor market, housing and manufacturing.

The U.S. Department of Labor reported Thursday that fell 41,000 to a seasonally adjusted 220,000 for the week ended Jan. 12, the lowest reading in more than 40 years.

The Philadelphia Fed’s fell to a reading of 22.2 from the previous month’s 27.9, while fell 8.2% to a seasonally adjusted annual rate of 1.192 million units in December.

Also adding pressure on the greenback was a rise in both the euro and sterling.

rose above $1.39 against the dollar before paring gains to trade at $1.3880, while the rose 0.35% to $1.2229 despite recent attempts by European Central Bank (ECB) officials’ to quash expectations that the central bank would announce plans to unwind its massive stimulus programme at next week’s meeting.

rose 0.02% to C$1.2443 as traders expectations of the Bank of Canada adopting a more aggressive stance on monetary policy measures eased following the Bank’s of Canada’s policy statement Wednesday.

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