US Shutdown & Job Cuts Pressure USDX; US-China Tech Tensions Deepen

EUR/USD rose 0.46% on Thursday, rebounding from earlier lows as broad US Dollar weakness followed disappointing US employment data. The softer labor market figures bolstered market expectations for a potential Federal Reserve rate cut in December.

A report from Challenger, Gray & Christmas revealed that US employers announced more than 150,000 job cuts in October, marking the steepest monthly decline in two decades. With the ongoing US government shutdown limiting access to official data, traders relied on private reports like this one, intensifying speculation that the Fed will continue easing monetary policy into year-end.

Money markets responded by increasing bets on December rate reduction, reflecting growing concerns about the resilience of the US labor market.

Comments from several Federal Reserve officials reinforced the cautious market tone.

In Europe, Eurozone Retail Sales were disappointed, falling 0.1% month-on-month in September versus expectations for a 0.2% increase. On an annual basis, sales growth slowed to 1.0% from 1.6%, according to Eurostat. Despite the weaker data, the euro gained as traders focused on the broader dollar retreat.

Gold prices advanced early on Friday as the US dollar weakened following soft private-sector employment data, which strengthened expectations for another Federal Reserve rate cut in December. The ongoing US government shutdown also supported safe-haven demand amid rising uncertainty.

Data released on Thursday showed the US economy shed jobs in October, led by declines in the government and retail sectors. Rising layoffs, along with cost-cutting measures and greater use of automation, underscored signs of weakness in the labor market.

The US dollar retreated across major currencies as investors responded to softer employment data and continued uncertainty over the government shutdown. A weaker jobs market typically raises the likelihood of monetary easing.

According to market pricing, there is now a 67% probability of a Federal Reserve rate cut in December, up from around 60% a day earlier. The Fed reduced interest rates last week, with Chair Jerome Powell indicating it could be the final adjustment for the year.

Non-yielding assets such as gold tend to benefit in a low-interest-rate environment and during periods of economic uncertainty.

At current levels, gold continues to find support from a softer dollar, a weaker US labor market, and heightened uncertainty surrounding fiscal and monetary policy.

Oil prices gained in Asian trading on Friday, rebounding from recent lows as a softer US dollar provided short-term support. However, persistent concerns over excess supply and weakening global demand kept crude on track for a second consecutive weekly decline.

Despite Friday’s uptick, oil remained pressured by ongoing concerns over a global supply glut and slowing demand growth.

The downturn followed reports that OPEC and its allies (OPEC+) increased output by roughly 3 million barrels per day in 2025, stoking fears of oversupply. Although the group signaled plans to pause additional production hikes in early 2026, markets still expect ample crude supply next year.

On the demand side, the US government shutdown has disrupted travel and economic activity, raising concerns about reduced fuel consumption. The Trump administration confirmed plans to cut flights by up to 10% at 40 of the nation’s busiest airports, further dampening demand expectations.

Adding to the bearish tone, US inventory data released earlier this week showed a sharp and unexpected rise in crude stockpiles, underscoring weaker consumption trends.

While short-term support from a weaker dollar has lifted prices, oil remains under pressure from oversupply risks, sluggish demand, and uncertainty surrounding US economic activity.

US stocks declined on Thursday, with major indexes dragged lower by renewed selling in technology shares. AI-related names, including Nvidia, led the downturn as investors reassessed high valuations, while weak US jobs data fueled concerns about the economy’s strength.

Nvidia (NASDAQ: NVDA) slumped almost 4%, leading losses across the tech sector. Other AI-linked names such as Palantir Technologies, Dell Technologies, and Advanced Micro Devices also traded sharply lower.

Qualcomm shares slipped after the chipmaker warned it could lose business from key customer Samsung Electronics next year, overshadowing stronger-than-expected sales and profit guidance for the current quarter.

Tesla shareholders voted to approve CEO Elon Musk’s $1 trillion compensation plan, tied to aggressive long-term performance goals. The package requires Musk to lift Tesla’s market capitalization from about $1.5 trillion to $8.5 trillion within a decade to fully vest.

Fresh labor market data showed US job cuts surged to their highest monthly level in 22 years, according to Challenger, Gray & Christmas. The report highlighted continued strain in the jobs market, with large employers such as Amazon and UPS recently announcing significant layoffs.

Total announced job cuts so far this year have reached roughly 1.1 million, exceeding all but the most severe economic crises, including the dot-com bust, the global financial crisis, and the pandemic.

Investors also monitored proceedings at the US Supreme Court, which began hearing arguments over whether President Donald Trump’s tariffs violated US law. The case centers on Trump’s use of the 1977 International Emergency Economic Powers Act (IEEPA) to justify sweeping import duties.