The Australian dollar rose on Monday while the Japanese yen weakened, as growing optimism that the US government could soon reopen reduced demand for the yen as a safe haven and supported growth-linked currencies, while European currencies remained broadly stable.

The US dollar gained 0.5% against the yen to 154.22, nearing a nine-month high reached earlier this month.

The Australian dollar climbed 0.55% against the US dollar to 0.6532 and advanced more than 1% against the yen. The AUD/JPY pair is often seen as a barometer of global risk appetite and growth prospects, typically moving in tandem with equity markets, which were also higher on Monday.

Kit Juckes, chief FX strategist at Société Générale, said, “The textbook trade right now in a ‘risk-on’ environment is long the Australian dollar versus the Japanese yen.”

The US Senate took a step late Sunday toward advancing legislation to reopen the federal government and end the longest shutdown in the country’s history. While the vote was procedural, several Democratic lawmakers reached a deal with Republicans, and President Donald Trump said things looked “very close to ending the shutdown.”

On prediction markets such as Polymarket, the implied probability of the shutdown ending before November 15 jumped to 92%.

If the shutdown is lifted, attention will shift back to US economic data, particularly the nonfarm payrolls report, which has not been released in over a month due to the government closure.

Markets currently price in roughly a 60% chance that the Federal Reserve will cut interest rates in December, though those expectations could shift sharply once new data are published.

“I fear that, at least initially, when we finally get the data, the numbers may disappoint for the US economy,” Juckes said.

Uncertainty kept the dollar steady against European currencies, with the euro at 1.1558, the pound at 1.3163, and the Swiss franc at 0.8062 — little changed on the day.

Local factors also influenced the yen and Australian dollar.

Japanese Prime Minister Sanae Takaichi said Monday she would set a new multi-year fiscal target allowing for more flexible spending, marking a step away from Japan’s long-standing fiscal discipline.

Separately, the Bank of Japan’s Summary of Opinions released Monday noted that “the fog surrounding Japan’s economic outlook has started to lift compared with July,” potentially paving the way for a rate hike in December that could support the yen.

Salman Ahmed, head of global macro and strategic asset allocation, said, “There’s too much optimism about whether this policy will be a full continuation of Abenomics, but we do expect another rate increase from the BOJ.”

Meanwhile, Reserve Bank of Australia Deputy Governor Andrew Hauser said in a speech that financial conditions in Australia are now near the neutral rate — the level that neither stimulates nor restrains the economy.

“The speech, which carried a relatively hawkish tone, helped lift the Australian dollar,” analysts at Westpac wrote in a note.

In Europe, the only notable mover was the Norwegian krone, which strengthened after data showed core inflation rose unexpectedly in October, reducing the likelihood of further rate cuts by the central bank.

The US dollar fell 0.44% against the krone to 10.11, while the euro declined by a similar margin to 11.7.

Gold prices jumped in European trading on Monday to their highest level in two weeks, extending gains for a second consecutive session amid strong safe-haven demand around the 4,000-dollar-per-ounce mark, supported by the current weakness in the U.S. dollar.

The U.S. Senate is set to hold additional votes later today on a bipartisan preliminary deal that could end the longest government shutdown in U.S. history, now extending beyond 40 days.

Price Overview

• Gold prices rose 2.1% to 4,085.26 dollars, the highest since October 27, up from an opening level of 4,000.57 dollars, after hitting an intraday low of 3,999.77 dollars.

• On Friday, gold gained 0.6%, marking its second advance in the last three sessions, supported by ongoing dollar weakness.

• The metal posted a weekly loss of less than 0.1% last week, its third consecutive weekly decline.

U.S. Dollar

The U.S. Dollar Index fell 0.1% on Monday, extending losses for a fourth straight session as the greenback continued to weaken against major and minor currencies.

On Sunday, the U.S. Senate appeared ready to move forward with legislation to reopen the federal government and end the 40-day shutdown, which has sidelined federal employees, delayed food assistance, and disrupted air travel.

Further votes are expected later today to finalize the bipartisan agreement, which includes funding measures through January.

U.S. Labor Market

With the monthly nonfarm payrolls report delayed due to the government shutdown, traders have turned to private-sector data showing job losses in October across government and retail sectors.

Cost-cutting measures and increased reliance on artificial intelligence technologies have led to a sharp rise in announced layoffs.

Westpac Bank noted in a research report that Challenger data indicate a significant jump in U.S. job cuts, signaling a potential slowdown in the labor market.

U.S. Interest Rates

• A survey published Friday showed U.S. consumer confidence fell to its lowest level in nearly three and a half years in early November amid concerns over the economic fallout from the record-long government shutdown.

• According to CME Group’s FedWatch tool, markets currently price a 65% probability of a 25-basis-point rate cut in December, with a 35% chance of rates remaining unchanged.

• Investors are closely monitoring comments from Federal Reserve officials to reassess rate expectations in the absence of official government data.

Gold Outlook

• Tim Waterer, chief market analyst at KCM Trade, said gold is seeing strong buying momentum at the start of the week, rising on expectations of a potential rate cut next month, even though the Fed has downplayed that likelihood.

• He added that as the U.S. government shutdown nears its end, greater clarity should return to key economic indicators, which have weakened noticeably since the start of the closure.

SPDR Fund

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 1.71 tons on Friday, marking a second consecutive daily increase and bringing total holdings to 1,042.06 metric tons — the highest level since October 24.

The euro rose in European trading on Monday against a basket of major currencies, extending its gains for a fourth consecutive session versus the U.S. dollar, supported by continued weakness in the greenback as investors awaited key Senate votes aimed at ending the longest government shutdown in U.S. history.

A slowdown in inflation across Europe during October eased price pressures on European Central Bank policymakers and revived expectations of an interest rate cut in December.

Price Overview

• EUR/USD climbed 0.15% to $1.1579, up from the day’s opening level of $1.1562, after touching an intraday low of $1.1542.

• The euro ended Friday’s session up 0.15% against the dollar, marking its third straight daily gain amid a rebound from three-month lows.

• On a weekly basis, the euro advanced 0.25% against the dollar — its first weekly rise in three weeks — as selling pressure on the European currency eased.

U.S. Dollar

The U.S. Dollar Index slipped 0.1% on Monday, extending losses for a fourth consecutive session and reflecting continued weakness in the greenback against both major and minor peers.

The decline came amid concerns that the Senate might fail to approve a preliminary deal to end the longest government shutdown in U.S. history, with additional votes expected later in the day.

European Interest Rates

• Recent data showed that headline inflation in the eurozone slowed in October in line with expectations, while core inflation held steady — reducing pressure on ECB policymakers.

• Following the release, money markets priced in a higher probability of a 25-basis-point rate cut by the ECB in December, rising from 10% to 25%.

• Investors now await further economic indicators from across Europe, as well as comments from ECB officials, to reassess the outlook for monetary policy.

The Japanese yen weakened in Asian trading on Monday against a basket of major and minor currencies, extending losses for a second consecutive session versus the U.S. dollar, as the greenback gained on optimism surrounding an end to the longest government shutdown in U.S. history.

Japanese Prime Minister Sanae Takaichi announced that her government plans to abandon its current annual fiscal target in favor of a new multi-year spending framework — a move that could pave the way for a new era of expansionary fiscal policy aimed at supporting Japan’s sluggish economy.

Price Overview

• USD/JPY rose 0.4% to ¥154.03, up from Friday’s closing level of ¥153.41, after touching an intraday low of ¥153.40.

• The yen ended Friday down 0.25% against the dollar following weak household spending data.

• For the previous week, the yen gained about 0.4% against the dollar, marking its first weekly rise in three weeks on renewed hopes of a December rate hike by the Bank of Japan.

U.S. Dollar

The U.S. Dollar Index rose 0.2% on Monday, heading for its first gain in four sessions, reflecting renewed strength in the greenback against major and minor peers.

The rebound followed increased optimism that the longest U.S. government shutdown in history could soon end, after the Senate approved the first stage of a bipartisan deal to reopen the federal government with funding measures extending through January.

Sanae Takaichi’s fiscal shift

Takaichi’s remarks at the end of last week sparked wide debate across financial circles after she said the government would replace its annual fiscal balance target with a broader, multi-year spending objective.

The shift signals Tokyo’s move away from its long-standing commitment to achieving a balanced budget by specific annual deadlines — a departure seen as loosening Japan’s traditionally strict fiscal discipline.

Takaichi argued that the annual framework is no longer suitable amid Japan’s multiple economic challenges, including weak growth, slowing industrial output, and rising living costs. She said the new approach would grant greater flexibility in managing fiscal policy over the medium term.

Analysts noted that while the decision could usher in a phase of fiscal expansion to boost growth, it also poses new challenges for the Bank of Japan in coordinating monetary policy with a more accommodative fiscal stance.

Japanese Interest Rates

• Although BOJ Governor Kazuo Ueda recently delivered his strongest signal yet that an interest rate hike could come in December, markets remain skeptical of the central bank’s gradual approach.

• Current market pricing suggests roughly a 50% chance of a 25-basis-point rate hike at the December meeting.

• Investors are awaiting upcoming data on inflation, unemployment, and wage growth in Japan to reassess those expectations.