NEW YORK: The US dollar weakened against the euro and yen on Tuesday on concerns about the deteriorating US labor market after a report showed that private employers cut jobs last month.
ADP Research said on Tuesday that its preliminary estimates show that private employers shed an average of 11,250 jobs a week in the four weeks ending October 25.
It comes as the federal government moves closer to reopening, which will unleash a flood of economic data that may point to a slowing economy.
“When the government is closed, the news stream is non-existent. With the government going to reopen, I think we’re going to begin seeing more cracks,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. The US Senate approved a compromise on Monday that would end the longest government shutdown in US history, breaking a weeks-long stalemate that has disrupted food benefits for millions, left hundreds of thousands of federal workers unpaid and snarled air traffic.
It next heads to the Republican-controlled House of Representatives, where Speaker Mike Johnson has said he would like to pass it as soon as Wednesday and send it on to US President Donald Trump to sign into law.
The dollar has bounced in recent weeks as traders price in fewer rate cuts on a more positive growth outlook for the US economy. Many Federal Reserve officials are also wary of making further rate cuts on concerns about the inflation outlook.
The dollar index, which measures the unit against a basket of currencies including the yen and the euro, fell 0.32 percent to 99.32, with the euro up 0.38 percent at USD1.16.
The euro is supported by the outlook for European Central Bank policy, with its key rate expected to stay unchanged through 2027, while the Fed is seen easing policy.
The market is pricing in 67 percent odds the Fed will cut rates in December.
Trading volumes were low on Tuesday with the US bond market closed for the Veterans Day holiday.
The Japanese yen strengthened 0.15 percent to 153.89 per dollar. The British pound edged higher, after earlier dropping on data showing that Britain’s labor market cooled noticeably in the third quarter as the unemployment rate jumped and wage growth slowed.
In cryptocurrencies, bitcoin fell 1.42 percent to USD104,110.