Image caption The dollar fell against other currencies after US politicians failed to reach an agreement on a budget

The dollar fell to an 8-month low against a range of currencies, before recovering slightly despite a partial shutdown of the US government.

Analysts said the fall in the dollar had not been more pronounced as the shutdown had been expected.

The shutdown began after the two houses of Congress failed to agree a budget.

The dollar index, which tracks the currency against a basket of six major currencies, at one point fell to 79.864, its lowest since February.

It has since picked up slightly.

The dollar also dropped to an eight-month low during Tuesday trading against the euro and a one-and-a-half year low against the Swiss franc, which is seen as a haven currency, before regaining some losses.

It also weakened against the Japanese yen, and fell back against the pound.

Wall Street edges higher

Meanwhile, the US stock market ended the day higher as investors shrugged off the US shutdown.

Shutdown impact: the business week ahead Jobs figures: The Bureau of Labor Statistics (BLS), which releases the closely-watched monthly jobs figures, is currently closed. However, papers the agency filed with the US government noted that last time there was a shutdown in 1995, the BLS had already collected the data for CPI, or inflation, figures. Because "the risk of disclosure of the CPI data during a shutdown was deemed unacceptable", the BLS brought in staff to compile and release the report. Presumably the agency could invoke the same logic this time around.

The Bureau of Labor Statistics (BLS), which releases the closely-watched monthly jobs figures, is currently closed. However, papers the agency filed with the US government noted that last time there was a shutdown in 1995, the BLS had already collected the data for CPI, or inflation, figures. Because "the risk of disclosure of the CPI data during a shutdown was deemed unacceptable", the BLS brought in staff to compile and release the report. Presumably the agency could invoke the same logic this time around. JP Morgan settlement: Many observers were expecting the announcement of a multi-billion dollar settlement between the bank and several US government agencies sometime soon. Some of those agencies are currently using a rump workforce. The Commodities and Futures Trading Commission, which regulates markets, is on a skeleton staff of 28 employees, down from 680. The Department of Housing and Development (HUD) is also largely shuttered, and the 28 employees left in the legal office are supposed to simply provide advice on legal matters relating to the shutdown, according to a filing.

Many observers were expecting the announcement of a multi-billion dollar settlement between the bank and several US government agencies sometime soon. Some of those agencies are currently using a rump workforce. The Commodities and Futures Trading Commission, which regulates markets, is on a skeleton staff of 28 employees, down from 680. The Department of Housing and Development (HUD) is also largely shuttered, and the 28 employees left in the legal office are supposed to simply provide advice on legal matters relating to the shutdown, according to a filing. Twitter IPO: The Securities and Exchange Commission has said it can remain operational for "a few weeks" due to extra funds. This means the agency can continue to evaluate Twitter's S-1 filing for a potential stock market listing.

The Securities and Exchange Commission has said it can remain operational for "a few weeks" due to extra funds. This means the agency can continue to evaluate Twitter's S-1 filing for a potential stock market listing. American Airlines / US Airways merger trial : A judge ruled on Tuesday that the trial to determine whether or not American Airlines and US Airways can merge will not be postponed. The Department of Justice, which sued to block the merger, had asked for the date to be pushed back, as many of its operations are closed during the shutdown. The trial will start on 25 November.

: A judge ruled on Tuesday that the trial to determine whether or not American Airlines and US Airways can merge will not be postponed. The Department of Justice, which sued to block the merger, had asked for the date to be pushed back, as many of its operations are closed during the shutdown. The trial will start on 25 November. Factory orders: Data on US factory orders was supposed to be released on Thursday. That release, along with today's release of US construction spending, has been delayed.

The Dow Jones industrial average closed up 62 points, 0.4% at 15,191.7, while the Standard & Poor's 500 index rose 13 points, or 0.8%, to end Tuesday trading at 1695.

"It would appear that the markets either aren't overly bothered by Congress's inability to avoid a government shutdown, or aren't particularly surprised," said analysts from the Alpari trading group.

Debt ceiling

Previously US government shutdowns have lasted anywhere between a day and a month.

The economic impact will depend on how long the deadlock lasts, but Goldman Sachs estimates a three-week shutdown could shave as much as 0.9% from US GDP this quarter.

Mike van Dulken, head of research at Accendo Markets, said the bigger worry was US politicians not being able to agree on lifting the so-called "debt ceiling", when the US government will reach the limit at which it can borrow money to pay its bills.

"The longer this goes unresolved, the closer it takes us to the 17 October debt ceiling, when there is no money to pay bills including sovereign debt - debt default is an altogether different issue," he said.

There are also concerns that markets will be affected by a possible delay in the release of key US economic data.

The government's construction spending report for August has already been delayed and there are concerns that the US Labor Department will not release its employment report, which is due on Friday.

Joe Rundle, head of trading at ETX Capital, said the shutdown could mean Federal Reserve policy makers holding off cutting back on their $85bn-dollar-a-month economic stimulus programme at their October policy meeting.

"Liquidity addicted market participants appear to be relatively sanguine this morning, hoping that this shutdown could go as far as seeing the Fed hold back from tapering all together in 2013," he said.