Dollar Gains and Gold Falls on Hawkish Fed Comments

Core Insights - The dollar index rose by +0.27%, reaching a 2.75-month high, supported by hawkish comments from several Federal Reserve presidents and stronger-than-expected economic data [1][3] - The ongoing US government shutdown poses a risk to the economy, potentially leading to interest rate cuts by the Federal Reserve if prolonged [2] - The markets are currently pricing in a 63% chance of a 25 basis point rate cut at the next FOMC meeting in December, with an overall expectation of an 82 basis point cut by the end of 2026 [3] Economic Indicators - The October MNI Chicago PMI increased by +3.2 to 43.8, surpassing expectations of 42.3, indicating stronger economic momentum [3] - Eurozone economic indicators showed improvement, with the October core CPI and German September retail sales rising more than anticipated, providing support for the euro [4] Federal Reserve Commentary - Kansas City Fed President Jeff Schmid opposed the recent rate cut, citing a balanced labor market and persistent inflation [3] - Dallas Fed President Lorie Logan expressed skepticism about further rate cuts unless there is clear evidence of falling inflation or a cooling labor market [3] - Cleveland Fed President Beth Hammack preferred to maintain current interest rates to help control inflation [3]