The U.S. dollar tracked marginally higher Wednesday, with volatility low as traders look towards the likely ending of the longest ever U.S. government shutdown.
At 04:40 ET (09:40 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher to 99.470.
Dollar recovers some losses The greenback edged higher as it recovered some of its losses from the previous session, after the human resources company ADP said that U.S. firms shed more jobs in late October.
This added to general concerns of the strength of the U.S. labor market, which is being closely monitored by Federal Reserve policymakers ahead of the December policy meeting.
“The dollar was briefly hit yesterday after private sector payroll firm, ADP, suggested that 11k jobs had been lost per week through October. This report used a different methodology from its recent release, showing +42k jobs created that same month. Yet the dollar did not stay offered for long and has come back a little bid overnight,” said analysts at ING, in a note.
Markets are pricing in a 61.9% chance for a 25 basis point cut in the Fed’s December 10-11 meeting, up from 57.8% yesterday, CME Fedwatch showed.
The U.S. Senate voted to approve a bill unlocking more government spending late-Monday, sending it to the House of Representatives for further approval.
“If approved, that means the U.S. government can reopen, perhaps on Friday, and that the September NFP jobs report (potentially USD negative) can be released early next week,” ING added.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. Euro drifts lower In Europe, EUR/USD dropped 0.1% to 1.1573, after the release of data showing German inflation slowed slightly in October to 2.3%, confirming preliminary data.
Inflation, or consumer prices harmonised to compare with other European Union countries, stood at 2.4% year-on-year in September.
GBP/USD fell 0.2% to 1.3124, with sterling after Tuesday’s release of surprisingly soft September U.K. unemployment data.
Also weighing on the pound is speculation that Prime Minister Keir Starmer could face a leadership challenge after the budget later this month.
“Even though Starmer’s approval ratings are very poor, his removal would create some doubt about the future of Chancellor Rachel Reeves and add some risk premium to U.K. asset markets,” ING said.
Yen slips to 9-month low In Asia, USD/JPY traded 0.4% higher to 154.73, with the safe-haven yen hit by the overall risk-on tone, falling to a nine-month low, with investors expecting looser fiscal policy under new Prime Minister Sanae Takaichi.
“One factor thought to be keeping USD/JPY supported is direct investment into the US. These potential flows have brought USD/JPY to psychological resistance at 155, where Japanese verbal intervention is picking up,” said ING.
USD/CNY traded marginally higher to 7.1177, while AUD/USD gained 0.2% to 0.6538 after a top Australian central banker said there was increasing debate about whether the current cash rate of 3.6% is restrictive enough to keep inflation in check.
