Traders have responded by trimming December rate cut odds to about 70%, down from 94% just a week ago. That’s helped lift the dollar across the board, particularly against the euro and yen, as rate differentials tilt in the greenback’s favor.
Shutdown Chokes Data Flow, But ISM Misses
The ongoing U.S. government shutdown — now in its 34th day — has delayed key economic reports, including nonfarm payrolls. That’s forcing traders to rely on second-tier data like ADP and ISM, with Monday’s ISM manufacturing print coming in soft at 48.7. It’s the eighth straight month of contraction, reinforcing a picture of sluggish demand — but not weak enough to cement a December cut.
Euro and Yen Retreat as Dollar Grinds Higher
The euro slipped to 1.15052, its weakest level since August 1, before clawing back slightly. The yen hovered near multi-month lows at 154.448, with the Bank of Japan’s gradualist stance failing to inspire confidence despite hints at a potential hike in December. Jawboning from Japanese officials suggests they’re watching closely — intervention risks are on the table.
Sterling was marginally weaker at 1.3190 ahead of the Bank of England’s meeting. A cut is on the table, but markets only see a one-in-three shot. The Aussie also dipped, though expectations that the RBA will stay on hold are offering some cushion.
DXY Nears 200-Day — Resistance Looms Overhead