Dollar Climbs on Hawkish Fed Comments

Group 1: Dollar Index and Economic Commentary - The dollar index (DXY00) has increased by +0.40%, reaching a 1.5-week high, driven by hawkish comments from Kansas City Fed President Jeff Schmid regarding the need to combat persistent inflation [1][3] - Political uncertainty in France and Japan is negatively impacting the euro and yen, thereby benefiting the dollar [1] - The ongoing US government shutdown, now in its second week, poses a bearish outlook for the dollar, with potential stagnation in GDP growth if the shutdown continues [2] Group 2: Eurozone Economic Indicators - The EUR/USD pair has decreased by -0.42%, remaining just above a 1.5-week low, influenced by signs of weakness in the Eurozone economy, particularly following a decline in German factory orders [4] - German factory orders for August unexpectedly fell by -0.8% month-over-month, contrasting with expectations of a +1.2% increase [5] - Market expectations for a rate cut by the European Central Bank (ECB) are minimal, with only a 1% chance of a -25 basis point cut at the upcoming policy meeting [5] Group 3: Japanese Yen Performance - The USD/JPY pair has risen by +0.44%, with the yen hitting a 6.25-month low against the dollar, primarily due to concerns over the election of Sanae Takaichi as the leader of Japan's ruling party [6] - Takaichi's election raises doubts about the Bank of Japan's (BOJ) timeline for policy tightening and increases concerns regarding a potential rise in debt supply due to her support for expanded financial stimulus [6]