Published: Wednesday, October 1, 2025 · 1:39 PM | Updated: Wednesday, October 1, 2025 · 1:39 PM
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(Bloomberg) — The dollar dropped to its lowest point in a week on Wednesday, as the US entered its first government shutdown in nearly seven years and a report showed private-sector payroll growth unexpectedly turned negative last month.
The Bloomberg Dollar Spot Index fell 0.2% and was on track for a fourth day of declines, while the yen led Group-of-10 gained versus the greenback and rallied to a two-week high. Treasuries rose across the curve and US stock futures retreated.
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Shutdowns have typically weighed on the greenback, and recent options market positioning shows traders preparing for more weakness this time around. Risk reversals — which measure the gap in demand between bullish and bearish trades — are signaling bets on further downside over the next month.
While shutdown-related declines in Treasuries and equities may end up being modest, “the one market where we would not look to fade the market move is FX,” said Mohit Kumar, chief European strategist at Jefferies, who expects dollar weakness to persist.
Bloomberg’s dollar gauge touched a session low on Wednesday following the release of a private-sector payrolls compiled by ADP Research for the month of September. These fell by 32,000 — compared to an expected increase of 51,000 — while the prior period was also revised down to negative territory.
Treasuries extended gains after the data and the policy-sensitive two-year yield fell some six basis points to 3.55%, while swaps traders bolstered bets on at least two interest-rate cuts from the Federal Reserve this year.
“It was a troubling dataset that has triggered a dovish shift in rate cut pricing,” wrote Vail Hartman, a US rates strategist at BMO Capital Markets in New York.
A prolonged shutdown is likely to increase pressure on the dollar. The greenback has already slumped this year to the lowest since 2022 as unpredictable policy making under President Donald Trump, escalating deficits and pressure on the Fed’s independence worry investors.
At the same time, the ADP release is poised to be this week’s highest profile reading of the US labor market given that the government’s September jobs report, originally scheduled to be released Friday, will most likely be delayed by the shutdown. Traders will also be watching a separate ISM employment reading to be released later in the Wednesday session.
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