The U.S. dollar depreciated against major currencies, including the euro and the yen, on Tuesday. This decline was driven by anxiety over the deteriorating labor market, following a new report indicating job losses among private employers last month.
A research firm reported its preliminary estimates on Tuesday. These figures showed that private sector payrolls shed an average of 11,250 jobs per week during the four-week period ending October 25.
Economic Data Flood Expected
This job data precedes the imminent reopening of the federal government. The resumption of operations is expected to release a large volume of delayed economic data. This upcoming data dump may further confirm a broader economic slowdown.
Marc Chandler, a chief market strategist, commented on the situation. “When the government is closed, the news stream is non-existent,” he stated. “With the government going to reopen, I think we’re going to begin seeing more cracks.”
The U.S. Senate approved a compromise on Monday. That deal is intended to conclude the nation’s longest government shutdown.
The weeks-long political stalemate had severely disrupted air traffic and impacted food benefits for millions. The legislation now moves to the House of Representatives.
The Speaker expects to pass it on Wednesday and send it to President Donald Trump for signing.
Financial analysts expect the official labor statistics bureau to publish a new data schedule between November 13 and 17, assuming the government reopens this week.
An economist suggested the full September employment report might be released soon after, likely around November 18 or 19.
Currency Outlook and Central Bank Policy
The dollar had previously gained strength since mid-September. At that time, traders began anticipating fewer interest rate cuts, based on a more favorable growth outlook for the U.S. economy.
Many Federal Reserve officials also remain hesitant to authorize further rate cuts due to continuing concerns about inflation.
However, the euro climbed back above its recent downward trend line against the dollar on Tuesday. “The underlying sentiment toward the dollar still remains negative,” Chandler noted.
The dollar index, which tracks the greenback against a basket of currencies including the euro and yen, dropped by 0.24%, settling at 99.39. The euro appreciated by 0.29%, reaching $1.159$.
The euro is bolstered by expectations for the European Central Bank’s policy. Its key interest rate is widely anticipated to remain unchanged through 2027. Conversely, the market expects the U.S. Federal Reserve to ease its policy.
Currently, the market is pricing in a 67% probability that the Federal Reserve will cut rates in December. Trading volumes remained subdued on Tuesday due to the U.S. bond market being closed for the Veterans Day holiday.
Other major currencies showed marginal movement. The Japanese yen appreciated by 0.06% against the dollar, reaching 154.06 per dollar.
The British pound remained flat after dropping earlier in the day following data showing the nation’s labor market cooled noticeably.
In the cryptocurrency market, bitcoin traded lower, falling 2.28% to $103,198$.
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