The dollar appreciated against the euro and yen on Thursday, with the greenback recovering against the Japanese currency following four consecutive days of declines, as traders assessed the implications of a potential U.S. government shutdown. The shutdown creates a void in government data, notably affecting the highly anticipated monthly jobs report for September that was scheduled for release on Friday. Despite ongoing releases of Federal Reserve and private data, the situation may not be as dire as previously anticipated.

“That truly misinterprets the evolution of the markets in relation to private sector data,” Chandler stated. “I believe that both the market and the Fed are operating with a clear understanding of the current situation.” A report, which integrates private and publicly available data, estimated the jobless rate for September at 4.3%, consistent with August, indicating that the anticipated swift increase in unemployment has not yet materialized. However, the specifics of the report, in conjunction with additional data, indicated a persistent sluggishness in the labor market.
The dollar experienced a decline on Wednesday following the release of the ADP Employment report, which indicated a reduction of 32,000 in private payrolls for September. This development has heightened expectations for two additional interest rate cuts by the Federal Reserve within the year.

However, the currency reversed that trend on Thursday. “Many individuals believed that the government shutdown would lead to a depreciation of the dollar. And I think that individuals found themselves positioned incorrectly, and are now being compelled to exit their investments,” Chandler said. The dollar index recorded an increase of 0.13% today, reaching a level of 97.86. The euro experienced a decline of 0.09%, settling at $1.1719. Market participants anticipate a 25-basis-point reduction at the Federal Reserve’s October meeting as highly likely, with a 90% probability assigned to a further cut in December. On Thursday, Dallas Fed President Lorie Logan stated that the U.S. central bank made a suitable decision to cut rates last month to mitigate the risk of a significant decline in the job market. However, she noted that the cooling has been gradual thus far and indicated that she is not inclined to pursue further rate cuts at this time.

The dollar appreciated by 0.08% against the Japanese yen, reaching a value of 147.17. Market participants are closely monitoring this weekend’s election for the leadership of Japan’s ruling party, seeking indications on the potential impact of fiscal policy on the currency. The British Pound depreciated by 0.25%, settling at $1.3443. Market participants are beginning to evaluate the implications of the UK November budget on the economy and the value of sterling. “In the UK there’s a focus on the fiscal situation,” stated Eric Theoret. In the realm of cryptocurrencies, bitcoin experienced an increase of 2.24%, reaching a value of $120,218.