FX.co ★ DXY Falls After ADP and US Government Shutdown

The dollar index fell to 97.6 on Wednesday, continuing a downward trajectory for the fourth consecutive day. This slump is largely attributed to weak US employment data alongside the ongoing government shutdown, both of which have amplified anticipations of Federal Reserve interest rate cuts. The ADP report revealed an unexpected decrease of 32,000 in private sector jobs for September, contrary to the anticipated 50,000 increase. This decline was partly due to data recalibration resultant from missing values in the Quarterly Census of Employment and Wages. Despite these adjustments, the overall trend of diminishing job growth was observed across most sectors. Concurrently, the government shutdown, stemming from a stalemate over healthcare funding, could hinder the release of vital economic reports, such as the weekly jobless claims and the nonfarm payroll numbers for September, thereby exacerbating market uncertainty. Approximately 750,000 federal workers are currently furloughed, with an estimated daily cost of $400 million. As inflation remains above target and the labor market shows signs of weakening, money markets are now anticipating a 90% likelihood of a 25 basis point rate cut by the Federal Reserve this month, with almost 70% probability of an additional cut before the end of the year.