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(Bloomberg) -- The dollar slipped Wednesday as the US entered its first government shutdown in nearly seven years and a report showing private-sector payroll growth turning negative kept a lid on the US currency.

The Bloomberg Dollar Spot Index pared losses late in New York trading but closed down a fourth day, its longest such streak in a month. The yen rallied to a two-week high, while Treasuries rose across the curve alongside US equities.

Shutdowns have typically weighed on the greenback, and recent options market positioning shows traders are preparing for more weakness this time around. Risk reversals — which measure the gap in demand between bullish and bearish trades — are signaling bets on further downside over the next month.

“You’re already seeing the weakness in the dollar,” George Goncalves, head of US macro strategy at MUFG, told Bloomberg Television on Wednesday. If the shutdown “were to linger, it could be disruptive.”

Bloomberg’s dollar gauge touched a session-low on Wednesday following the release of private-sector payrolls data for September by ADP Research. These fell by 32,000, compared to an expected increase of 51,000, while the prior period was also revised down to negative.

Treasuries held onto gains seen after the release, with the policy-sensitive two-year yield down some seven basis points to 3.54%, while swaps traders bolstered bets on at least two interest-rate cuts from the Federal Reserve this year.

“It was a troubling dataset that has triggered a dovish shift in rate cut pricing,” wrote Vail Hartman, a US rates strategist at BMO Capital Markets in New York.

The greenback found some reprieve later on Wednesday after the Supreme Court refused to allow President Donald Trump to immediately fire Fed Governor Lisa Cook while she sues to keep her job. Cook can stay in the job at least until the courts rule after hearing arguments for the case early next year.

A prolonged US government shutdown will likely increase pressure on the dollar. The greenback slumped this year to the lowest since 2022 as unpredictable policy making under Trump, escalating deficits and pressure on the Fed’s independence worry investors.

The ADP release is poised to be this week’s highest profile reading of the US labor market given that the government’s September jobs report, originally scheduled to be released Friday, will most likely be delayed by the shutdown.

“There is little sense that either side is willing to compromise at this point, suggesting the shutdown may last a while,” said Shaun Osborne, chief currency strategist at Scotiabank in Toronto. “For markets, tracking the US economy becomes a little harder amid the delay of some data releases.”

(Updates prices as of close, adds details on Lisa Cook case as well as comment from MUFG.)