The US Dollar strengthened, reaching a near one-week high, as investors weighed the impact of the government shutdown, trade tensions, and monetary policy on the US economy. Hopes for a resolution to the government shutdown and a potential trade deal with China boosted sentiment, while anticipation builds for the upcoming CPI report and further Federal Reserve rate cuts.
- The dollar index rose to around 98.7, reaching a near one-week high.
- Investors are assessing the impact of the government shutdown, trade-related and monetary policy uncertainty on the US economic outlook.
- National Economic Council Director Kevin Hassett said the shutdown could end this week.
- President Donald Trump expects to reach a fair trade deal with Chinese President Xi Jinping at a meeting in South Korea later this month.
- Investors are awaiting Friday’s September CPI report.
- Markets widely expect the Federal Reserve to deliver a 25-basis-point rate cut next week, with additional reductions likely in December and into next year.
The dollar’s recent performance reflects a complex interplay of factors influencing investor confidence. Optimism surrounding potential resolutions to both the government shutdown and US-China trade disputes is providing support. However, ongoing economic uncertainty and expectations of further interest rate cuts by the Federal Reserve are likely to temper any significant upward momentum for the dollar in the near term. The upcoming CPI report will be closely watched as it could provide further clues about the health of the US economy.