The US dollar slipped on Wednesday after private-sector employment data pointed to signs of weakness in the labour market, fuelling speculation that the Federal Reserve may cut interest rates in December.
Payroll-processor ADP Research Institute reported that US firms shed an average of more than 11,000 jobs weekly in the four-week period ending October 25. The dollar index, which measures the greenback against major peers, was quoted near 99.46, its weakest in over a week.
Markets have priced in approximately a 68% probability of a 25-basis-point Fed rate cut in December, up from around 62% a day earlier. Meanwhile, anticipation of an imminent end to the federal government shutdown in the US added to the shift in risk sentiment, reducing the safe-haven appeal of the dollar.
In the backdrop:
- The benchmark 10-year US Treasury yield dipped ~3 basis points to 4.079%, also signalling increased rate-cut expectations.
- Currencies tied to risk assets, such as the Australian and New Zealand dollars, gained modestly whereas the safe-haven Japanese yen slid to a nine-month low of 154.2 per dollar.
In summary, the dollar’s drop reflects growing conviction among traders that the Fed may shift toward easing given labour-market softness and the end of the US government shutdown — a combination that often weakens the greenback’s appeal.
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