US Dollar Index remains below 98.00 due to looming government shutdown

• US Dollar Index struggles due to market caution amid the looming government shutdown.

• The possible government shutdown may delay the upcoming US jobs report this week.

• President Trump has warned that failure by Congress to pass a funding bill could lead to widespread federal job cuts.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is remaining subdued for the third successive session and trading around 97.90 during the Asian hours on Tuesday.

The Greenback faces challenges as traders adopt caution due to concerns that the upcoming US jobs report may not be released this week, with the government nearing a funding freeze and possible shutdown. Traders await the September Nonfarm Payrolls report for insights into the labor market, alongside data on job openings, private payrolls, and the ISM manufacturing PMI.

US President Donald Trump has warned of mass federal job cuts if Congress fails to pass a funding bill, effectively putting his own government at risk and threatening further disruptions to federal operations.

Reuters cited the White House saying that President Trump signed a proclamation on Monday imposing a 10% tariff on lumber imports and a 25% tariff on vanities, kitchen cabinets, and upholstered wooden products. The proclamation states that the tariffs will take effect on October 14."

The US August inflation report boosted the likelihood that the US Federal Reserve (Fed) will likely deliver another interest rate cut in October. Markets are now pricing in nearly a 90% chance of a Fed rate cut in October and a 70% possibility of another reduction in December, according to the CME FedWatch Tool.