Dollar pressured as US budget deadlock drags on

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The dollar hovered near an eight-month low against a basket of currencies on Monday as a U.S. budget deadlock showed no sign of breaking.

Investors flocked to perceived safe havens like the yen and the Swiss franc, driving the dollar to it weakest since mid-August against the Japanese currency.

As the U.S. government moved into the second week of a shutdown and an Oct. 17 deadline to increase the nation's borrowing limit approaches, neither Republicans nor Democrats offered any sign of impending agreement on either the shutdown or the debt ceiling, and both blamed the other side for the impasse.

The dollar index fell 0.1 percent to 79.94, not far from an eight-month low of 79.627 hit on Thursday.

The dollar last neared since Aug. 12 lows, last trading at 96.81 yen, down 0.7 percent on the day.

Traders cited key support at 96.67 yen, its 200-day moving average. Reported large option expiries at 96.50 yen and 96.75 yen could keep the pair close to its current levels.

The dollar fell 0.4 percent to 0.9035 Swiss franc, slipping towards a 19-month low of 0.89675 set on Thursday.

The euro rose 0.1 percent to $1.3575, not far from Thursday's eight-month high of $1.3645.

Some analysts said losses in the dollar have been limited so far as investors still hope that politicians will find a last-minute resolution to avert a disastrous debt default.

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