By Hani Abuagla, Senior Market Analyst at XTB MENA
The dollar held broadly stable on Wednesday, pausing after yesterday’s decline. The latter was triggered by weaker-than-expected US retail sales and a further deterioration in labor-market signals. Treasury yields were also steady after a pullback, with the 10-year hovering near the 4% mark, its lowest level in a month. Additional declines could weigh on the currency.
Tuesday’s data painted a picture of a cooling economy. Producer prices rose 0.3% in September, matching expectations, but the details showed that the rebound was driven largely by volatile energy components. By contrast, retail sales disappointed, rising only 0.2% versus the 0.4% expected.
Labor-market indicators also weakened meaningfully. The ADP Employment Change Weekly measure showed private employers cut an average of 13,500 jobs per week in the four weeks ending November 8. Consumer confidence fell more than forecast as well, reinforcing the narrative that household sentiment is deteriorating, which could dampen economic growth prospects and weigh on the currency.
These developments have strengthened expectations for a December rate cut, with markets now assigning an 85% probability. Investors will turn their attention to today’s initial jobless claims, expected at 225k, for further confirmation of labor-market softness that could shape the Fed’s stance.