The dollar index (DXY00) on Tuesday fell to a 1.5-week low and finished down by -0.16%.  Signs that the US labor market has weakened are weighing on the dollar after a report Tuesday from ADP showed US private employers shed more jobs than they created in the four weeks ending October 25.  Also, Tuesday's report showing a decline in the US Oct NFIB small business optimism index to a 6-month low was bearish for the dollar. 

The dollar is also under pressure amid signs that a resolution to the US government shutdown is nearing.  After the Senate voted 60-40 on Monday to pass a temporary continuing resolution (CR) to fund the government, the House is expected to vote on the measure on Wednesday, and House Speaker Johnson said he expects it will pass quickly.  If approved, the bill goes to President Trump, who said he will sign it into law.  The reopening of the government would allow the release of economic reports, which may show a weakening US economy, prompting the Fed to keep cutting interest rates. 

The US Oct NFIB small business optimism index fell -0.6 to a 6-month low of 98.2, weaker than expectations of 98.3.

ADP reported Tuesday that for the four weeks ending October 25, 2025, US private employers shed an average of 11,250 jobs per week, suggesting a net loss of jobs and a weakening labor market.

The markets are discounting a 67% chance that the FOMC will cut the fed funds target range by 25 bp at the next FOMC meeting on December 9-10.

EUR/USD (^EURUSD) climbed to a 1.5-week high on Tuesday and finished up by +0.26%.  The euro was supported on Tuesday by a weaker dollar.  Also, comments on Tuesday from ECB Executive Board member Elderson and ECB Governing Council member Kocher were supportive of the euro, as they said the current interest rate level is appropriate.  On the negative side for the euro was the unexpected decline in the German Nov ZEW survey expectations of economic growth.   

Central bank divergence is supportive of the euro, with the ECB seen as largely finished with its rate-cut cycle, while the Fed is expected to cut rates several more times by the end of 2026.

The German Nov ZEW survey expectations of economic growth unexpectedly fell -0.8 to 38.5, weaker than expectations of an increase to 41.0.

ECB Executive Board member Elderson said the current ECB interest rate level "is appropriate, but we will continue to be data-dependent and will decide one meeting at a time."

ECB Governing Council member Kocher said, "The ECB is in a good position on interest-rate policy, and the expectation is that not much more will happen in the next few months."

Swaps are pricing in a 3% chance of a -25 bp rate cut by the ECB at the December 18 policy meeting.

USD/JPY (^USDJPY) on Tuesday fell by -0.03%.  The yen recovered from an 8.75-month low against the dollar Tuesday and moved slightly higher after the dollar retreated on some negative US labor market news.  Also, the larger-than-expected increase in the Japan Oct Eco Watchers Outlook Survey to a 2.25-year high was bullish for the yen.  The yen added to its gains on Tuesday as T-note prices rose. 

The yen has recently been weak due to Japanese political uncertainty and a delayed BOJ rate hike.  The markets are discounting a 42% chance of a BOJ rate hike at the next policy meeting on December 19.

The Japan Oct eco watchers outlook survey rose +4.6 to a 2.25-year high of 53.1, stronger than expectations of 48.8.

December COMEX gold (GCZ25) on Tuesday closed down -5.70 (-0.14%), and December COMEX silver (SIZ25) closed up +0.433 (+0.86%).

Precious metals on Tuesday settled mixed, with gold falling back from a 2-week high and silver posting a 3-week high.  Tuesday's fall in the dollar index to a 1.5-week low is bullish for metals prices. Precious metals also have support on speculation that the end of the US government shutdown will allow the release of economic reports showing the economy is weakening, which could prompt the Fed to keep cutting interest rates.  Precious metals jumped to their highs on Tuesday after a report from ADP showed the US labor market shed more jobs in the four weeks ending October 25, suggesting the US labor market weakened, a dovish factor for Fed policy. 

Gold prices gave up their advance and turned lower on Tuesday amid improving prospects that lawmakers will end the US government shutdown, which is reducing safe-haven demand for precious metals.  On Monday, the Senate passed a CR to fund the government, and the House is expected to pass the measure on Wednesday, when it will be forwarded to President Trump, who said he will sign it into law.

Strong central bank demand for gold is supportive of prices, following last week's report from China's PBOC that bullion held in its reserves rose to 74.09 million troy ounces in October, the twelfth consecutive month the PBOC has boosted its gold reserves. Last Thursday, the World Gold Council reported that global central banks purchased 220 MT of gold in Q3, up 28% from Q2. 

Precious metals continue to have some underlying safe-haven demand amid the ongoing US government shutdown, uncertainty over US tariffs, geopolitical risks, central bank buying, and political pressure on the Fed's independence.  

Since posting record highs in mid-October, long liquidation pressures have weighed on precious metals prices.  Holdings in gold and silver ETFs have recently fallen after posting 3-year highs on October 21.