The U.S. dollar slid to two-week lows against the yen on Wednesday after data showed private-sector jobs in the world's largest economy contracted last month, boosting expectations the Federal Reserve will cut interest rates two more times this year.

Against the euro and sterling, the dollar fell to one-week troughs in the wake of the jobs data.

Data showed that U.S. private employment shrank by 32,000 jobs last month after a downwardly revised 3,000 decline in August, according to the ADP National Employment Report on Wednesday. Economists polled by Reuters had forecast private employment increasing 50,000 following a previously reported 54,000 advance in August.

"The job situation seems to just be getting a little bit worse, data point after data point," said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull in Toronto.

"The ever-weakening U.S. jobs market is the big story. And with the official data sources on hold because of the shutdown, some people might like it actually because those data sources haven't been very reliable lately."

U.S. rate futures have priced nearly 50 basis points of cuts this year following the ADP data, from about 43 bps of easing on Tuesday, with market-implied odds of around 99% for an October rate move, according to LSEG data.

The jobs data followed a mixed reading for the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey, or JOLTS, on Tuesday. The report showed U.S. job openings increased marginally in August while hiring declined, consistent with a softening labor market.

The ADP report, jointly developed with the Stanford Digital Economy Lab, gained more attention from investors seeking fresh clues on the labor market as the Labor Department's more comprehensive and closely followed employment report for September will not be published on Friday.

The private sector jobs report came amid a U.S. government shutdown, which commenced hours after the Senate rejected a short-term spending measure that would have kept government operations afloat through November 21.

Senate Republican Leader John Thune said the chamber would vote again on the House-passed measure on Wednesday.

"We are concerned with the government shutdown, which also does not bode well for the buck," said Juan Perez, director of trading at Monex USA in Washington.

"The dollar has few reasons to remain a beacon of strength and reliability when the American government is closed and there is evidence presented that Americans are struggling to find jobs."

Source: fxstreet