The financial world felt a familiar tremor on Tuesday. The U.S. dollar retreated against global heavyweights like the euro and the yen.
The immediate catalyst was a fresh wave of anxiety over the health of the American labor market. A new report indicated job reductions among private companies last month.
A research firm published its preliminary findings. Those figures showed private sector payrolls lost an average of 11,250 jobs each week during the four weeks leading up to October 25.
The Storm of Data Approaches
This worrying job data is just the first drop before a flood. It precedes the anticipated reopening of the federal government. Market observers know the resumption of operations means a massive backlog of delayed economic reports will be released.
This coming deluge of data may very well confirm a deeper, broader slowdown in the economy.
Marc Chandler, a chief market strategist, captured the market mood perfectly. He noted the information drought during the political crisis: “When the government is closed, the news stream is non-existent.” He predicted the future clearly: “With the government going to reopen, I think we’re going to begin seeing more cracks.”
Meanwhile, the political gridlock that started the crisis is fading. The U.S. Senate approved a deal on Monday intended to end the longest government shutdown in the nation’s history.
This weeks-long stalemate disrupted air travel and cut off food assistance for millions. Now, the legislation moves to the House of Representatives. The Speaker plans to pass it quickly and send it to President Donald Trump for his signature.
Financial analysts are already making plans. They expect the official labor statistics bureau to release a new reporting schedule between November 13 and 17, assuming the government is operational this week.
One economist suggested the crucial September employment report, delayed by the crisis, might appear soon after, likely around November 18 or 19.
Shifting Tides in Currency Policy
The dollar had enjoyed a recent rally. Since mid-September, traders anticipated fewer interest rate cuts. This expectation was based on hopes for strong U.S. economic growth.
However, many Federal Reserve officials remain cautious. They are hesitant to greenlight further rate cuts due to persistent concerns about inflation.
But on Tuesday, the momentum shifted decisively. The euro broke back above its recent downward trend line against the dollar. Chandler observed, “The underlying sentiment toward the dollar still remains negative.”
The dollar index, which measures the greenback against major currencies, dropped by 0.24%. The euro, conversely, gained 0.29%, rising to $1.159$.
The euro finds strength in the expected stability of the European Central Bank’s policy, which is widely forecast to keep its key rate unchanged through 2027. The U.S. Federal Reserve, however, is broadly expected by the market to adopt an easier stance.
The market currently gives a 67% probability to the Federal Reserve cutting rates in December. Trading activity was minimal on Tuesday, primarily because the U.S. bond market was closed for the Veterans Day holiday.
The Japanese yen showed slight appreciation, gaining 0.06% against the dollar. The British pound remained flat after earlier falling due to domestic data confirming a cooling labor market. Even in the volatile cryptocurrency world, bitcoin fell by 2.28%, trading lower at $103,198$.
