Dollar Dips Amid Labor Market Concerns and Anticipated U.S. Government Reopening

The dollar weakened as U.S. labor market concerns grew after private-sector job data showed firms shedding jobs, leading to speculation of a Fed rate cut. The potential reopening of the U.S. government is also expected to release delayed economic data. Currency and Treasury yields are reacting to these developments.

The dollar experienced a decline on Wednesday following the release of private-sector U.S. jobs data that raised concerns about the labor market's health. Investors are also preparing for the possible U.S. government reopening, which could unleash pending economic reports.

According to payroll processor ADP, U.S. companies have been shedding over 11,000 jobs weekly in late October, suggesting an evolving hiring trend and hinting at a weakening labor market. This prompted a drop in the dollar and increased speculation of a Fed rate cut in December as early Asia trade began.

As the euro held steady, the sterling moved away from a seven-month low, with the dollar holding near its lowest point against a basket of currencies. Traders are now assigning a 68% likelihood of a December Fed rate cut, citing labor market and inflation risks. Meanwhile, the House of Representatives planned to vote on a resolution to end the ongoing government shutdown, potentially lifting risk-oriented currencies and affecting the yen due to Japan's fiscal policy strategies.

(With inputs from agencies.)