NEW YORK: The US dollar slid to two-week lows against the yen on Wednesday after data showed private-sector jobs in the world’s largest economy contracted last month, boosting expectations that the Federal Reserve will cut interest rates two more times this year.
Against the euro and sterling, the dollar fell to one-week troughs in the wake of the jobs data.
Data showed that US private employment shrank by 32,000 jobs last month after a downwardly revised 3,000 decline in August, according to the ADP National Employment Report on Wednesday.
Economists polled by Reuters had forecast private employment increasing 50,000 following a previously reported 54,000 advance in August.
“The dollar reacting poorly makes sense and especially after the big downward revision for August going from positive 50,000 to a contraction,” said Juan Perez, director of trading at Monex USA in Washington.
“This labor indicator sparks worry that the sluggishness across the economy may be more serious than previously thought. It is one thing to see a slower pace of hiring but another completely more pressuring item that we are experiencing job losses.” US rate futures have priced nearly 50 basis points of cuts this year following the ADP data, from about 43 bps of easing on Tuesday, with market-implied odds of around 99 percent for an October rate move, according to LSEG data.
The jobs data followed a mixed reading for the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, or JOLTS, on Tuesday. The report showed US job openings increased marginally in August while hiring declined, consistent with a softening labor market.
The ADP report, jointly developed with the Stanford Digital Economy Lab, has gained more attention from investors seeking fresh clues on the labor market as the Labor Department’s more comprehensive and closely followed employment report for September will not be published on Friday.
The private sector jobs report came amid a US government shutdown, which commenced hours after the Senate rejected a short-term spending measure that would have kept government operations afloat through November 21.
Senate Republican Leader John Thune said the chamber would vote again on the House-passed measure on Wednesday. The Senate is due to convene at 1400 GMT. In morning trading, the dollar fell 0.8 percent against the yen to 146.73, after earlier falling to its weakest since September 17. The greenback was flat against the Swiss franc at 0.7966 franc.
The greenback also fell to a one-week low against the euro, which was last up 0.2 percent at USD1.1754.
Sterling also rose to a one-week high versus the dollar, and was last up 0.5 percent at USD1.3512.
The dollar index, which tracks the US currency against six major peers, fell to a one-week trough, and was last down 0.3 percent at 97.56.
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