DXY Weakens & Fed Cut Expectations Pressure Dollar
The US Dollar Index (DXY) weakened to 97.85 in early Asia, hovering below 98.00 as the US government shutdown extended uncertainty and delayed the September NFP. However, the ISM Services PMI and S&P Global Services PMI (final) are still scheduled for release this Friday. The impasse in Congress has prevented funding from being agreed upon; the Senate is not expected to convene over the weekend, so concerns about the shutdown's impact continue to weigh on the dollar.
From private data, ADP reported private sector payrolls of -32,000 in September (August revised to -3,000 from +54,000), reinforcing the narrative of labor market weakness and fueling bets for two Fed rate cuts this year. CME FedWatch shows the market pricing in a 25 bps cut in October and a ~90% chance of an additional cut in December.
However, the tone of Fed officials could restrain dollar weakness. Dallas Fed President Lorie Logan considered last month's rate cut "insurance" against a sharp weakening in the labor market, but emphasized caution regarding further cuts. If hawkish comments intensify, the USD has the potential to rebound in the short term, although current macroeconomic sentiment remains negative for the greenback. (ads)
Source: Newsmaker.id
