Dollar, U.S. stock futures steady; U.S. government shutdown seen short

By Dominic Lau TOKYO (Reuters) - The dollar and U.S. stock futures held steady on Wednesday as investors bet the first partial U.S. government shutdown in 17 years will be short-lived. Sentiment was also supported by robust U.S. manufacturing activity, which expanded at its fastest pace in almost 2-1/2 years. U.S. S&P futures added 0.1 percent after the cash index advanced 0.8 percent on Tuesday as investors viewed a pullback over the past week as a buying opportunity. U.S. Treasury futures slipped 5-1/2 ticks. Australian and Seoul shares were expected to open higher. While global financial markets appeared hopeful that the shutdown will be short-lived, the immediate impact for investors is a drop off in U.S. economic data at a time when they are trying to gauge if the Federal Reserve will soon scale back stimulus. The U.S. Bureau of Labor Statistics, which was scheduled to publish the closely watched non-farm payrolls report on Friday, said it would not issue anything until government operations resumed. Congress missed a midnight deadline to agree on a bill that funds government operations, resulting in up to one million workers being put on unpaid leave, as Democrats and Republicans fight over President Barack Obama's healthcare program. "We think risk sensitive currencies are vulnerable while the shutdown persists and that the dollar is likely to trade defensively until a resolution is reached," analysts at BNP Paribas wrote in a client note. "At the same time, we wouldn't overstate the dollar's vulnerability," they said, adding that their analysis suggested that the market is no longer holding long dollar positions and the possibility of an end to the shutdown meant investors will be reluctant to get too bearish on the dollar. The dollar stood at 98.05 yen after falling as low as 97.65 yen on Tuesday. The Nikkei share average was expected to open slightly lower, with Nikkei futures in Chicago slipping 0.3 percent from the close in Osaka. Ahead of the European Central Bank's policy meeting later in the day, the euro was steady at $1.35235, having hit an 8-month high of $1.3589 in European trade on Tuesday. The ECB is widely expected to stick to its policy course. ($1 = 98.1000 Japanese yen) (Additional reporting by Ian Chua; Editing by Edwina Gibbs)