The dollar index (DXY00) on Wednesday fell from a 5.25-month high and finished down by -0.05%.  The dollar gave up its advance on Wednesday and posted modest losses after stocks recovered following Tuesday's rout, which dampened liquidity demand for the dollar. Also, the dollar is still under pressure from the ongoing US government shutdown.  The longer the shutdown is maintained, the more likely the US economy will suffer and the more likely the Fed will have to cut interest rates. The dollar initially m ...

The dollar index (DXY00) on Tuesday rose by +0.37% and posted a 3-month high.  Tuesday's slump in equity markets has boosted liquidity demand for the dollar.  The dollar also had carry-over support from Fed Chair Powell's warning last week that another rate cut in December is not a foregone conclusion. Bearish factors for the dollar include lower T-note yields on Tuesday and the weaker-than-expected report on US Oct Wards total vehicle sales. More News from Barchart The dollar is still under pressure fr ...

The dollar index (DXY00) today is up by +0.29% at a 3-month high.  Today's slump in equity markets has boosted liquidity demand for the dollar.  The dollar also had carry-over support from Fed Chair Powell's warning last week that another rate cut in December is not a foregone conclusion. Bearish factors for the dollar include lower T-note yields today and the weaker-than-expected report on US Oct Wards total vehicle sales. More News from Barchart The dollar is still under pressure from the ongoing US g ...

Economic Indicators - The US September ADP employment change unexpectedly fell by 32,000, marking the largest decline in 2.5 years, and August's figure was revised down to a loss of 3,000 from a previously reported gain of 54,000 [2] - The US September ISM manufacturing index rose by 0.4 to a 7-month high of 49.1, exceeding expectations of 49.0, while the ISM price paid sub-index fell by 1.8 to an 8-month low of 61.9, below expectations of 62.7 [3] Currency Movements - The dollar index (DXY) is down by 0.19% at a 1-week low, influenced by the US government shutdown and weak labor market data, which increased the likelihood of a Fed rate cut to 100% for the upcoming FOMC meeting [1] - The euro (EUR/USD) is up by 0.09% at a 1-week high, supported by dollar weakness and an upward revision to the Eurozone September S&P manufacturing PMI [4] - The USD/JPY is down by 0.61%, with the yen reaching a 2-week high against the dollar due to increased safe-haven demand following the US government shutdown and positive Japanese economic indicators [7] Central Bank Policies - The market anticipates that the ECB is nearing the end of its rate-cut cycle, while the Fed is expected to implement approximately two more rate cuts by the end of the year [5] - Swaps are pricing in a 1% chance of a 25 basis point rate cut by the ECB at the October 30 policy meeting [6]

Group 1: Dollar Index and Economic Indicators - The dollar index (DXY00) is down -0.02%, influenced by dovish comments from Fed Governor Michelle Bowman regarding the need for decisive action to lower interest rates due to a weakening labor market [1][4] - The US Q2 current account balance showed a deficit of -$251.3 billion, which was smaller than the expected deficit of -$256.6 billion, providing some support for the dollar [3] - The September S&P manufacturing PMI for the US fell -1.0 to 52.0, which was weaker than the expected 52.2, contributing to the dollar's decline [1][3] Group 2: Federal Reserve and Interest Rates - Markets are currently pricing in a 91% chance of a -25 basis point rate cut at the next FOMC meeting scheduled for October 28-29 [4] - Fed Governor Michelle Bowman emphasized the need for the FOMC to act decisively in response to deteriorating labor market conditions [4] Group 3: Eurozone Economic Performance - The euro is down -0.03% after the Eurozone September S&P manufacturing PMI fell -1.2 to 49.5, which was weaker than the expected no change at 50.7 [5][6] - Despite the decline in manufacturing PMI, the Eurozone's September S&P composite PMI rose +0.2 to 51.2, marking the strongest pace of expansion in 16 months [5][6]

Group 1: Dollar Index and Federal Reserve Actions - The dollar index (DXY00) fell by -0.27% on Monday due to expectations of a -25 basis point cut in the fed funds target range at the upcoming FOMC meeting [1] - The S&P's rally to a new record high has reduced liquidity demand for the dollar, contributing to its decline [1] - The US September Empire manufacturing survey fell to a three-month low of -8.7, which was weaker than the expected 5.0, further pressuring the dollar [3] Group 2: Market Expectations and Rate Cuts - Markets are pricing in a 100% chance of a -25 basis point rate cut at the upcoming FOMC meeting, with an 82% chance of a second -25 basis point cut at the October 28-29 meeting [3] - Overall, markets anticipate a total rate cut of -68 basis points by year-end, bringing the federal funds rate down to 3.65% from the current 4.33% [3] Group 3: Euro Performance and ECB Outlook - The euro (EUR/USD) rose by +0.30% on Monday, driven by dollar weakness and hawkish comments from ECB Governing Council member Kocher, indicating the ECB is nearing the end of its rate-cutting cycle [4] - However, gains in the euro were limited by a significant drop in the German August wholesale price index and Fitch Ratings' downgrade of France's credit rating, which are both bearish for the euro [5] - Ongoing geopolitical tensions, particularly the continuation of the Russian-Ukrainian war, are also negatively impacting the euro [5]