Dollar Edges Lower as Traders Await U.S. Jobs Data Amid Shutdown Fears

The U.S. dollar index slipped by 0.2% to 97.92 on Monday, easing from recent gains as investors turned their attention to Friday’s nonfarm payrolls (NFP) report for September.

The labor market remains the central focus for Federal Reserve policymakers, who earlier this month cut interest rates by 25 basis points. Officials emphasized the need to support a slowing jobs market despite lingering inflation risks. Fed projections still suggest more cuts are likely before year-end, but the pace remains uncertain.

Economists expect 51,000 jobs were added in September, up from 22,000 in August, while the unemployment rate is forecast to remain steady at 4.3%. A softer print could reinforce expectations for further easing, while a stronger number might delay cuts. Analysts at Vital Knowledge said an NFP below 75,000 would likely secure an October cut, while a figure above 115,000, combined with core PCE inflation just under 3%, could persuade the Fed to pause.

Traders currently price in around 40 basis points of easing by end-2025, down from earlier expectations of 65 bps, reflecting some skepticism after last week’s robust GDP and jobless claims data.

Complicating the outlook, a potential U.S. government shutdown looms as lawmakers face a September 30 funding deadline. Without an agreement, the government would enter its 15th partial closure since 1981, potentially delaying the release of the September jobs report. President Donald Trump is set to meet Congressional leaders from both parties in a bid to break the impasse.

Meanwhile, investor focus has also been drawn to a legal dispute over Fed Governor Lisa Cook’s possible dismissal by the Trump administration, raising fresh concerns about the central bank’s independence.