The US Dollar faced downward pressure due to expectations of further interest rate cuts by the Federal Reserve, exacerbated by the ongoing government shutdown and escalating US-China trade tensions. Market sentiment anticipates multiple rate cuts in the near future.
- The dollar index slipped below 99.
- Federal Reserve Chair Jerome Powell’s remarks highlighted a weakening labor market, reinforcing expectations for further interest rate cuts.
- The ongoing federal government shutdown has prevented the release of crucial economic data, clouding the economic outlook.
- Markets are nearly fully priced in for another quarter-point rate cut this month, with an additional reduction seen in December, followed by three more next year.
- The dollar came under pressure from escalating US-China trade tensions after President Donald Trump threatened China with a cooking oil embargo in retaliation for Beijing’s soybean boycott.
- The euro advanced after France proposed suspending major pension reforms.
- The yen strengthened as traders unwound the “Takaichi trade.”
Overall, factors are weighing heavily on the dollar’s strength. Anticipated monetary policy adjustments and geopolitical uncertainties are contributing to a less favorable outlook for the currency. These interconnected pressures are driving fluctuations in value against other major currencies.