The dollar experienced a decline in early Asia trade on Friday, contributing to a downward trend among major currencies. Investors, faced with a lack of official data regarding the U.S. labor market, reacted to indications of weakness reflected in private sector surveys. The dollar index, which measures the greenback’s strength against a basket of six currencies, decreased by 0.5% to 99.674, reversing its earlier gains this month as expectations grew for a cut at the Fed’s next meeting on December 10.

The U.S. government shutdown has delayed the publication of the monthly non-farm payrolls report, prompting traders to focus on private sector data indicating that the U.S. economy experienced job losses in October within the government and retail sectors. Additionally, cost-cutting measures and the integration of artificial intelligence by companies have resulted in a notable increase in announced layoffs. “U.S. Challenger jobs data indicated a spike in U.S. job cuts, suggesting a possible cooling in U.S. labour market conditions,” as per a research report.

Traders increased their positions on a potential rate cut despite Chicago Federal Reserve President Austan Goolsbee stating on Thursday that the absence of official inflation data during the government shutdown “accentuates” his caution regarding further interest rate reductions. “In conditions of reduced visibility, it is prudent to exercise caution and reduce speed,” he conveyed. According to the reports, trading in Fed funds futures indicates a 70% likelihood of a cut at the U.S. central bank’s next meeting, an increase from the 62% probability reported a day prior. Against the yen, the dollar was quoted at 153.17 yen, reflecting a 0.1% increase compared to late U.S. levels. This movement follows the release of data on Friday, which indicated that Japanese household spending in September increased by 1.8% year-over-year, falling short of the median market expectation of a 2.5% rise.

The Australian dollar was valued at $0.6479, whereas the kiwi experienced a slight increase of 0.1%, trading at $0.5635, with both currencies remaining relatively stable. The offshore yuan was quoted at 7.1233 yuan per dollar, remaining stable in early Asian trading. Sterling is currently trading at $1.3135, remaining unchanged for the day following the Bank of England’s decision to maintain interest rates, which was determined by a narrow 5-4 vote, with Governor Andrew Bailey providing the pivotal vote. British finance minister Rachel Reeves has informed the country’s budget watchdog that an increase in personal taxation is one of the “major measures” she is set to unveil in her upcoming budget, as reported by The Times on Thursday.