11.11.202519:12:35UTC+00DXY Slides on Weak Labor Data

The dollar index declined to approximately 99.4 on Tuesday, influenced by weaker US labor indicators and increased speculation of potential easing by the Federal Reserve, which reduced demand for the US dollar. According to ADP's high-frequency data, private employers laid off around 11,250 jobs weekly over the four-week period ending October 25. This trend of job losses has led markets to anticipate a roughly two-thirds chance of an interest rate cut in December, consequently narrowing the expected short-term interest rate differentials compared to major currencies. As a result, both the euro and the yen saw strengthening, with expectations that the European Central Bank will maintain its current policy stance, and recent foreign exchange and policy moves from Japan rendering the yen more competitive. Additionally, advancements in Washington towards reaching an agreement to reopen the government are set to resume official data dissemination and diminish the elevated safe-haven demand that had bolstered the dollar during the shutdown, thereby contributing to the currency's decline.