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The dollar index (DXY) fell by 0.05% on Tuesday, pressured by signs of weakness in the US labor market, with ADP reporting an average loss of 2,500 jobs per week for the period ending November 1. Initial weekly unemployment claims stood at 232,000 for the week ending October 18. Continuing claims increased by 10,000 to a two-month high of 1.957 million. Market expectations now assign a 47% chance of the Federal Open Market Committee cutting rates by 25 basis points at its next meeting on December 9-10.
The Nov NAHB housing market index unexpectedly rose to a seven-month high of 38, up from 37, providing some support for the dollar. Conversely, the euro fell by 0.07% as geopolitical tensions surrounding Russia’s actions heightened, especially after EU diplomat Kaja Kallas labeled recent aggressions as terrorism. The swap market prices a 3% chance of a ECB rate cut at its December policy meeting.
The Japanese yen declined to a 9.5-month low against the dollar as the Bank of Japan indicated it would gradually adjust its monetary easing. The market discounts a 28% chance of a BOJ rate hike at the approaching December 19 policy meeting. Meanwhile, December COMEX gold and silver closed down 0.20% and 0.37%, respectively, amid reduced expectations for a Fed rate cut at the December FOMC meeting.
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