Dollar Turns Lower as US-China Tensions Ramp Up

Group 1 - The dollar index (DXY) fell by -0.04% after reaching a 1-week high, influenced by a potential US export restriction to China and the ongoing US government shutdown [1] - The British pound weakened, leading to a decline in GBP/USD to a 1-week low, which may prompt the Bank of England to consider interest rate cuts [2] - The markets are anticipating a 97% probability of a -25 basis point rate cut at the upcoming FOMC meeting on October 28-29 [3] Group 2 - The euro (EUR/USD) recovered from a 1-week low, finishing up by +0.09%, supported by short covering and hawkish comments from ECB Vice President Guindos [3] - Guindos stated that the current ECB interest-rate level is adequate, with balanced risks to consumer-price growth, and swaps indicate a 2% chance of a -25 basis point rate cut at the ECB's October 30 meeting [4] - The USD/JPY fell by -0.01%, with Japanese trade data showing increased exports and imports, although concerns about the new Prime Minister's monetary policy stance limit yen gains [5]