– Joseph Dahrieh, Managing Principal at Tickmill
The US dollar held in a narrow range on Friday, consolidating after a week of losses as investors awaited fresh catalysts. With the nonfarm payrolls report delayed due to the government shutdown, market focus shifted to the ISM Services PMI, expected to ease modestly to 51.7. Any deviation from this forecast could spark volatility in yields and currency markets.
The shutdown itself is seen as having limited near-term economic impact, though it has added to broader concerns over policy uncertainty and fiscal risks. Treasury Secretary Scott Bessent warned the funding lapse could weigh on growth, while President Donald Trump heightened tensions by threatening large-scale federal layoffs to pressure Democrats.
On the monetary side, Dallas Fed President Lorie Logan reiterated that last month’s rate cut was a prudent step to cushion against further labor market weakness. Meanwhile, alternative labor indicators have highlighted ongoing fragility. A Chicago Fed model estimated the jobless rate held at 4.3% in September, unchanged from August, while ADP reported a surprise decline of 32,000 private payrolls. Together, these figures reinforced expectations that the Fed will continue easing through year-end. As such, US treasury yields could remain under pressure.