"The index's rebound from its intraday lows during the Asian session does not reflect genuine strength, but rather a temporary attempt to withstand mounting pressures from economic and political factors. In my view, this consolidation resembles a "waiting phase" before the next clear direction is defined, which makes caution the prevailing theme for now. The latest U.S. private-sector jobs report revealed an unprecedented sharp decline not seen since 2023, with a loss of 32,000 jobs in September, coupled with a downward revision of August's figures."
"This underscores the fragility of the labour market. Such data leaves the Fed with little room for patience, pushing it further toward monetary easing, with two additional rate cuts this year now appearing almost inevitable. With labour market weakness in focus, any recovery in the dollar will remain fragile and temporary, as confidence in the economy is the key factor in sustaining the currency's strength."
"The industrial sector has also failed to provide meaningful support for the dollar. Despite a slight improvement in the Purchasing Managers' Index, the indicator remains stuck in contraction territory for the seventh consecutive month. This persistent weakness places further strain on the overall economy and erodes the dollar's appeal as a haven. The government shutdown only exacerbates the situation. The political deadlock and failure to pass a spending plan highlight the depth of division, leading to the suspension of vital economic data"
U.S. Dollar Index consolidates within a narrow 97.50–97.75 range amid anticipation over upcoming Federal Reserve decisions and a government shutdown. The recent intraday rebound during the Asian session reflects temporary resilience rather than genuine strength. Private-sector payrolls plunged by 32,000 in September with August revised downward, highlighting labour market fragility and increasing odds of Federal Reserve monetary easing and multiple rate cuts this year. Industrial activity remains in contraction for a seventh month, weakening economic support for the dollar. The government shutdown deepens uncertainty by suspending vital economic data and amplifying downside risks for the currency.
Read at London Business News | Londonlovesbusiness.com
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