- October 1, 2025
- Posted by: Melanie Scott
- Category: Market News
The US government officially shut down last night at midnight ET, creating uncertainty across markets and delaying key federal data releases, including Friday’s nonfarm payrolls (NFP) report. Private-sector and Federal Reserve data will still be released, meaning markets are not completely in the dark. The shutdown has weighed on the US dollar, as DXY fell for a fourth consecutive session.
The US labour market showed signs of caution in September, as the ADP non-farm employment report revealed a 32K decline, missing expectations of a 52K gain. August was revised down to a 3K decrease from the initial 50K surge. Annual wages rose 4.5%. While Q2 reflected strong growth, US employers are clearly taking a more measured approach to hiring.
US manufacturing activity continued to weaken. The ISM Manufacturing PMI reported 49.1%, marking the seventh consecutive month of contraction. Rising input costs remain a concern, with 32.5% of manufacturers reporting higher raw material prices, largely driven by steel and aluminum tariffs. Similarly, Canada’s manufacturing sector contracted faster in September, with its PMI dropping to 47.7 from 48.3. Output and new orders declined at a quicker pace than in August, affected by tariffs and broader economic uncertainty. Employment, purchasing, and inventory levels were also reduced, and export sales, particularly to the US, remained weak.
Eurozone inflation grabbed some attention as the ECB was busy patting itself on the back for hitting its 2.0% target in August, only for the flash core CPI to tick up to 2.2% in September, thanks mainly to stubbornly higher food prices. Markets are still expecting the ECB to stay on the sidelines for the rest of the year, but that could change with any major data surprises.
The EUR and GBP both continued their run up on USD, and the yen gained for a fourth straight day, supported by recent hawkish Bank of Japan commentary.
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