The U.S. dollar appeared poised to conclude the week approximately stable on Friday, as market participants aimed to weigh the Federal Reserve’s aggressive stance against ongoing apprehensions regarding the U.S. economy. Meanwhile, investors were evaluating the implications of data that raised concerns about the global economic outlook: In October, Chinese exports experienced an unexpected decline, marking their most significant decrease since February, following several months of frontloading U.S. orders to avoid tariffs. The dollar initiated a five-day rally last week following Federal Reserve Chair Jerome Powell’s recognition of the potential risks associated with additional easing measures; however, it experienced a significant decline on Thursday due to disappointing labor data.

U.S. Treasury yields remained unchanged on Friday, following a decline the previous day due to economic uncertainty stemming from the prolonged government shutdown in Washington and concerns regarding the legality of President Donald Trump’s tariffs. The euro appreciated by 0.1% against the dollar, reaching $1.1559, surpassing the performance of other European currencies like sterling and the Swiss franc. The euro is gaining traction due to expectations of a stable policy rate, whereas both the U.S. and the UK are anticipated to implement further rate cuts in 2026. Chinese data indicates that Beijing might have faced challenges in diversifying its exports from the United States, a trend that could heighten concerns about increasing Chinese influence on European markets.

“With the December Fed meeting more or less a coin toss which crucially depends on the labour market picture, the market is overreacting to any hints about the labour market,” said Mohit Kumar, noting the lack of economic data as the government shutdown continues. “Our perspective continues to be that Powell’s remarks from the previous FOMC meeting indicate that the threshold for a December cut is elevated,” he added. The delay in the release of the monthly non-farm payrolls report due to the shutdown has led traders to focus on private sector data, which indicated a decline in jobs within the government and retail sectors for October. The implementation of cost-reduction strategies and the integration of artificial intelligence have resulted in a significant increase in layoffs. Earlier this week, Barclays projected a 60% likelihood that the U.S. government shutdown – the longest in U.S. history – would conclude between November 11 and 21, while estimating a 15% chance that it might extend into December.

The dollar index, which gauges the currency’s strength against a basket of six peers, remained unchanged at 99.67 and is poised for a 0.05% decline this week. The asset has regained some strength; however, it continues to be confined within the same trading range established since August. A surge into safe-haven assets earlier this week bolstered the U.S. dollar, which has recovered some of its safe-haven allure, experts noted, despite the Japanese yen becoming the market’s favored defensive option. Tech-heavy stock markets were poised for their most significant weekly declines in seven months, contributing to heightened market anxiety. The dollar increased by 0.05% against the yen, reaching 153.14, following a dip to 152.82 earlier in the session, marking its lowest point since October 30. The rate outlook appears to provide limited assistance, as investors anticipate that the Bank of Japan will require additional time before implementing another hike. “If the BoJ does not move in January, there may be no rate hike likely until the new fiscal year and consequently interest rates may be stuck at 0.5% until next May, even with inflation remaining at 3%, where it has been on average for more than three years now,” stated Mark Dowding.