FX.co ★ Dollar Pressured by Weak Jobs Data

The dollar index maintained a position around 99.5 on Wednesday, reflecting losses sustained in the preceding session. This movement stemmed from signs of vulnerability in the labor market, which heightened expectations for an imminent reduction in Federal Reserve interest rates. Data from ADP indicated that private employers have been reducing their workforce by approximately 11,250 jobs weekly over the last four weeks leading up to October 25. This has raised alarms about the state of the labor market, especially with the government shutdown causing a delay in the official release of the monthly employment report. Currently, there is approximately a 68% probability priced into the markets for a 25-basis-point rate cut in December, an increase from about 62% the previous day. Concurrently, there is growing optimism that the longest government shutdown on record may come to an end shortly, as the Republican-majority House of Representatives is anticipated to pass legislation reinstating funding to essential government departments and agencies. In the past week, the dollar has depreciated against the euro, Australian dollar, and New Zealand dollar, while showing gains against the British pound and Japanese yen.