Weak Jobs Data Reinforces Rate Cut Outlook
The latest ADP employment report underscored weakness in the labor market, with private employers cutting 32,000 jobs in September, the steepest drop since March 2023.
August figures were also revised down to a loss of 3,000 jobs from a previously reported gain. This reinforces market expectations of two Fed rate cuts before year-end, pressuring the dollar as investors anticipate a more accommodative stance.
The ISM manufacturing PMI improved slightly to 49.1 in September but remained in contraction for a seventh month, offering limited support to the Greenback.
Government Shutdown Adds to Dollar Headwinds
The partial US government shutdown adds uncertainty, raising the risk of delays to critical data releases, including Friday’s Nonfarm Payrolls report. With economic signals already soft, the absence of timely data could amplify volatility in the USD.
Outlook
In the near term, the DXY is likely to remain range-bound, with any rebound facing resistance amid weak labor data, dovish Fed expectations, and political uncertainty.
US Dollar Index (DXY) – Technical Analysis