Dollar steady as potential shutdown deal

Dollar steady as potential shutdown deal offsets weak labor data

Today’s markets analysis on behalf of Joseph Dahrieh, Managing Principal at Tickmill

The dollar index held steady on Wednesday as investors awaited final developments in Washington, where lawmakers are expected to vote on a compromise to end the record-long government shutdown. The reopening would restore funding to federal agencies and allow the Federal Reserve to regain access to key economic data.

However, the dollar could remain under pressure following Tuesday’s disappointing ADP employment figures, which pointed to a softening labor market. Private employers cut an average of 11,250 jobs per week through late October, while separate data from Challenger, Gray & Christmas showed more than 153,000 announced job cuts last month. Combined with weak employment components in both ISM manufacturing and services reports, the data reinforced concerns over labor market fragility.

Markets now price roughly a 63% probability of a December rate cut, as investors increasingly expect the Fed to maintain a dovish stance amid weakening job momentum. Long-dated US Treasury yields edged lower, with the 10-year note slipping further from its recent highs, signaling growing caution among investors and adding to downward pressure on the greenback.

Zaid Barem / ymm