Dollar Weakens Amid Goverment Shutdown Fears and Anticipation of Jobsโข Report
teh dollar dipped against major currencies on Monday, reversingโฃ some of last week’s โgains fueled by stronger-than-expected economic data. Investors are now focused on upcoming labor market figures, hoping โฃfor clarity on the Federal โReserve’s future interest rateโ policy.
Recent economic releases – includingโ positive housing โdata, durable goods orders, and GDP revisionsโ – alongside a sharp decline in unemployment claims, have led markets to scale back expectationsโค for near-term interest rate cuts. Dealers now anticipate a 42 basis point reduction in US interest rates by December, and a total of 105 basis points by the end of 2026, a decrease of approximately 25 basis points โฃfrom mid-September expectations.
Adding to theโฃ downward pressure on the dollar are concerns about โa potential US โgovernment shutdown. โฃ Financing is set to โฃexpire on Tuesday, and a failure by โคCongress to pass โa funding bill could lead to a partial government closure beginning Wednesday, โthe โstart of the โ2026 fiscal โyear.
“Clients are largelyโฃ dismissing the risk of โgovernment activity, and are lookingโ at the dollar’s โคrise last week in anticipation of issuing labor market data that might โpotentially โbe weak in the coming days,” noted corbay, โCorbay,โค Corbay, of โToronto.
By the end of morning trading, the dollar had fallen 0.6% to 148.585 yen, despite achieving its best weekly gain since early July. The dollar index,โค measuring the currency against a basket of six majorโฃ peers, decreased 0.2% to 97.90, after rising 0.5% last week. โค The euro โgained 0.3% โฃagainst the โขdollar,โ trading at $1.1734.
investors are closelyโ watching for theโค potentialโ impact of โฃaโฃ government shutdown on the release of the โcrucial non-agricultural jobs report scheduled for โคFriday.