Dollar Slides on Signs of US Labor Market Weakness

Economic Indicators - The dollar index (DXY00) is down by -0.13% due to signs of weakness in the US labor market, which have increased expectations for the Fed to continue cutting interest rates after ADP reported job cuts this month [1] - US weekly initial unemployment claims were reported at 232,000 for the week ending October 18, with continuing claims rising by +10,000 to a two-month high of 1.957 million [2] - ADP reported that US employers shed an average of 2,500 jobs per week in the four weeks ending November 1 [3] Housing Market - The November NAHB housing market index unexpectedly rose by +1 to a seven-month high of 38, surpassing expectations of no change at 37 [3] Currency Movements - EUR/USD recovered from overnight losses, up by +0.09%, as weakness in the US labor market benefits the euro, with the ECB seen as largely finished with its rate-cut cycle [4] - USD/JPY is down by -0.10%, with the yen recovering from a 9.5-month low against the dollar, supported by falling T-note yields and safe-haven demand due to a -3% slump in the Nikkei Stock index [6] - The yen initially moved lower due to dovish comments from BOJ Governor Ueda regarding gradual adjustments to monetary easing [7] Market Expectations - Markets are pricing in a 49% chance that the FOMC will cut the fed funds target range by 25 basis points at the next meeting on December 9-10 [3] - Swaps are pricing in a 4% chance of a -25 basis point rate cut by the ECB at the December 18 policy meeting [5]