Dollar Retreats as the US Government Reopens

Core Insights - The dollar index has fallen to a 2-week low, down by -0.29%, due to speculation that the reopening of the US government will lead to the release of delayed economic reports indicating a weakening US economy, which may prompt the Federal Reserve to continue cutting interest rates [1] - The euro has risen to a 2-week high, up by +0.28%, supported by a weaker dollar and central bank divergence, with the European Central Bank (ECB) expected to be done with its rate-cut cycle while the Fed is anticipated to cut rates multiple times by the end of 2026 [4] US Dollar and Federal Reserve - The dollar's losses are limited by hawkish comments from Federal Reserve officials, with Boston Fed President Susan Collins and Cleveland Fed President Beth Hammack advocating for steady interest rates due to persistent high inflation [2][3] - The market is pricing in a 53% chance of a 25 basis point cut in the fed funds target range at the upcoming FOMC meeting on December 9-10 [3] Eurozone Economic Indicators - Eurozone industrial production for September increased by +0.2% month-over-month, which was below expectations of +0.7% [4] Japanese Yen Dynamics - The yen has appreciated as it recovers from a 9.25-month low against the dollar, supported by a stronger-than-expected Japanese producer price report, which is seen as hawkish for Bank of Japan (BOJ) policy [5] - Japanese Finance Minister Katayama's comments regarding potential government intervention in the forex market to support the yen have also provided carryover support [6]