**Market Brief: Tuesday, February 3, 2026** **US Dollar & Federal Policy** The US dollar is holding steady today, supported by resilient economic data and a recalibration of Federal Reserve expectations. Following the Fed's decision last week to pause rate cuts—leaving the benchmark rate at **3.50%–3.75%**—markets are adjusting to a potentially longer period of stability before any further easing. While a partial government shutdown technically began on January 31, market anxiety remains low. Investors are largely looking past the disruption, anticipating a resolution as the House returns to Washington today with plans to vote on a Senate-reached deal. **Global Currencies** * **Australian Dollar (AUD):** The Aussie dollar is outperforming peers, driven by strong speculation of an imminent policy tightening. As the Reserve Bank of Australia (RBA) meets today, markets are pricing in a roughly **70% chance** of an interest rate hike, marking a potential divergence from other major central banks. * **Japanese Yen (JPY):** In contrast, the yen is under pressure, continuing its recent downturn. The currency faces headwinds as the gap between US and Japanese yields remains a key driver for traders. **Key Takeaway** Volatility remains subdued as markets await the RBA’s decision and the conclusion of the US funding vote. Focus is shifting squarely to central bank divergence, with the US holding steady, Australia potentially hiking, and Japan lagging behind.