Dollar Slips on Economic Woes

Group 1: Dollar Index and Economic Indicators - The dollar index (DXY00) fell to a 1-week low, finishing down by -0.15% due to pressure from rising US job cuts and declining consumer sentiment [1] - US job cuts in October surged by 175% year-on-year, marking the highest increase in 22 years, which supports the outlook for the Federal Reserve to continue cutting interest rates [1] - The University of Michigan's US November consumer sentiment index dropped to a nearly 3.5-year low of 50.3, falling more than expected from 53.0 [3] Group 2: Federal Reserve and Interest Rates - The ongoing US government shutdown is exerting additional pressure on the dollar, with potential negative impacts on the US economy and increased likelihood of Fed interest rate cuts [2] - Fed Vice Chair Philip Jefferson indicated that interest rates are still "somewhat restrictive" and suggested a cautious approach to further rate cuts as the Fed approaches the neutral rate [5] - Markets are pricing in a 67% chance that the FOMC will cut the fed funds target range by 25 basis points at the upcoming meeting on December 9-10 [5] Group 3: Inflation Expectations and Consumer Credit - Mixed news on inflation expectations, with the University of Michigan's 1-year inflation expectations unexpectedly rising to +4.7%, while the 5-10 year expectations eased to +3.6% [4] - US consumer credit in September increased by +$13.093 billion, surpassing expectations of +$10.230 billion [4] Group 4: Euro Performance - The euro (EUR/USD) rallied to a 1-week high, finishing up by +0.15% due to a weaker dollar and better-than-expected German trade data [6] - German September exports and imports rose more than anticipated, contributing to the euro's strength [6] - Central bank divergence is supporting the euro, as the ECB is perceived to be nearing the end of its rate-cut cycle, while the Fed is expected to implement several more rate cuts by the end of 2026 [6]