Dollar Firms on Signs of US Economic Strength

Group 1 - The dollar index (DXY) reached a 5.25-month high, increasing by +0.08% due to stronger-than-expected employment data and an ISM services index rise [1][3] - The US October ADP employment change rose by +42,000, surpassing expectations of +30,000, indicating a robust labor market [3] - The ISM services index increased by +2.4 to 52.4, exceeding expectations of 50.8, marking the fastest expansion in 8 months [4] Group 2 - The dollar received support from reports of moderate Senate Democrats considering an end to the government shutdown, alongside Fed Chair Powell's comments on interest rate cuts [2] - The ongoing US government shutdown poses risks to the economy, potentially leading to interest rate cuts if prolonged [3] - The markets are pricing in a 64% chance of a 25 basis point cut in the fed funds target range at the next FOMC meeting on December 9-10 [4] Group 3 - The EUR/USD fell to a 3-month low, down by -0.02%, primarily due to dollar strength and easing producer price pressures in the Eurozone [5] - The Eurozone's October S&P composite PMI was revised upward by +0.3 to 52.5, indicating the strongest expansion in nearly 2.5 years [6] - Central bank divergence is evident, with the ECB likely finished with its rate-cut cycle while the Fed is expected to implement further cuts by the end of 2026 [6]