Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The U.S. dollar remained under pressure on Wednesday, slipping toward one-week lows as the federal government shut down following a failed Senate vote to extend funding, raising concerns over delayed jobs data critical for Federal Reserve policy.
The dollar index edged 0.1% lower to 97.92, extending recent losses. The greenback weakened 0.5% against the yen, trading at 147.07 — its softest in two weeks — although it pared earlier declines against the Swiss franc, climbing 0.2% to 0.7978 francs.
Safe-Haven Flows and BOJ Speculation
Market activity suggested pockets of safe-haven demand, with the yen and Treasuries finding buyers. However, Rabobank strategist Jane Foley noted uncertainty over whether yen strength reflected haven demand or speculation that the Bank of Japan could raise interest rates.
Japanese sentiment data supported the case for policy tightening, with the BOJ’s Tankan survey showing improving confidence among large manufacturers. Traders now assign a 40% chance of a BOJ rate hike this month.
Shutdown Halts Key Data
The U.S. shutdown, effective from midnight Tuesday, has forced federal agencies to suspend non-essential operations, including the release of economic statistics. This means September’s nonfarm payrolls report, originally due Friday, may be delayed.
The jobs report is seen as a pivotal input into the Fed’s October 29 meeting, where traders currently price in a 95% probability of a quarter-point cut. Without official data, private indicators such as the ADP employment report will take on added significance.
Fed Policy Outlook
The labor market remains central to the Fed’s outlook. A mixed JOLTS survey on Tuesday showed job openings rising slightly in August, while hiring slowed. The Fed has emphasized that weakening employment conditions justify easing, though officials have warned against cutting too aggressively amid sticky inflation.
President Donald Trump, meanwhile, said the shutdown gives his administration room for “irreversible” actions, adding further uncertainty to the political and economic backdrop.
Euro Holds Gains
The euro traded steady at $1.1727, near one-week highs, shrugging off data showing eurozone manufacturing activity contracted in September, with new orders falling at their fastest pace in six months. The single currency has gained 0.2% this month and is up 13.5% year-to-date.
