The dollar index (DXY00) on Friday ended the day little changed. The dollar was undercut by Friday’s slightly-weaker-than-expected US CPI report, which gave the Fed a bit more latitude to cut interest rates.  The dollar was also undercut by Friday’s -0.6 bp decline in the US 10-year T-note yield, which hurts the dollar's interest rate differentials. The Sep US CPI report of +0.3% m/m and +3.0% y/y was slightly weaker than market expectations of +0.4% m/m and +3.1% y/y.  Also, the Sep core CPI report of +0 ...

The dollar index (DXY00) on Thursday rose by +0.04% as it awaits Friday's US CPI report for September.  The dollar garnered support from Thursday's existing US home sales report, which showed sales rose to a 7-month high.  Also, higher T-note yields on Thursday strengthened the dollar's interest rate differentials.  In addition, weakness in the yen benefited the dollar, after the yen fell to a 1.5-week low on Thursday on concerns that new Japanese Prime Minister Takaichi will advocate a less hawkish moneta ...

Core Viewpoint - The dollar index is experiencing downward pressure due to dovish comments from the Federal Reserve and disappointing economic data, while the euro is gaining strength amid easing political risks in France and supportive comments from the European Central Bank. Group 1: Dollar Performance - The dollar index (DXY00) is down by -0.21% and has reached a one-week low, influenced by dovish remarks from Fed Governor Christopher Waller regarding potential interest rate cuts to support the labor market [1] - The October Philadelphia Fed business outlook survey fell significantly by -36.0 to a six-month low of -12.8, which was weaker than the expected 10.0, contributing to bearish sentiment for the dollar [3] - The ongoing US government shutdown is also seen as a negative factor for the dollar, as prolonged shutdowns could harm the US economy [3] Group 2: Economic Indicators - The October NAHB housing market index rose by +5 to a six-month high of 37, surpassing expectations of 33, indicating some positive momentum in the housing sector [3] - Richmond Fed President Tom Barkin noted that US productivity growth appears to be improving "significantly," which may help mitigate inflationary pressures from trade tariffs [4] Group 3: Euro Performance - The EUR/USD pair is up by +0.21% and has reached a one-week high, supported by easing political risks in France after Prime Minister Lecornu survived two no-confidence votes [5] - Hawkish comments from ECB Governing Council member Wunsch indicated that the likelihood of additional ECB rate cuts has been decreasing, further supporting the euro [5][6]

Group 1: Dollar Performance - The dollar index (DXY00) fell by -0.24% as it reversed its overnight gains due to positive comments from ECB President Lagarde, which boosted the euro and negatively impacted the dollar [1] - The ongoing US government shutdown is bearish for the dollar, with potential economic repercussions if the shutdown persists [1] - Expectations for a rate cut by the Fed at the upcoming FOMC meeting on October 28-29 were reinforced by dovish comments from Fed Chair Powell, leading to accelerated losses in the dollar [1][4] Group 2: US-China Trade Tensions - The US-China trade conflict escalated with China sanctioning five US units of South Korean shipbuilder Hanwha Ocean Co., reflecting ongoing tit-for-tat actions between the two nations [4] - The imposition of special port fees on each other's vessels has significant implications for the global economy, as vessels account for over 80% of international trade [4] Group 3: Euro Performance - The euro (EUR/USD) rose by +0.30% after recovering from early losses, driven by positive remarks from ECB President Lagarde about the Eurozone economy [5] - The German October ZEW expectations of economic growth survey exceeded expectations, providing additional support for the euro [5] - Political uncertainty in France, particularly regarding a potential no-confidence vote for Prime Minister Lecornu, has created downward pressure on the euro [6]

Group 1: Dollar Index and Trade Relations - The dollar index (DXY00) is up by +0.32% due to the Trump administration signaling openness to a trade deal with China, which eases trade tensions [1] - The ongoing US government shutdown is bearish for the dollar, as prolonged shutdowns could negatively impact the US economy [1][2] Group 2: Euro and Political Uncertainty - The EUR/USD is down by -0.46% as the euro faces pressure from a stronger dollar and political uncertainty in France [3] - President Macron's announcement of a new cabinet has temporarily eased political uncertainty, but a no-confidence vote is expected later this week [3] Group 3: Yen and Japanese Political Landscape - The USD/JPY is up by +0.78% as the yen is under pressure from a stronger dollar and reduced safe-haven demand due to a rebound in US equity markets [4] - Concerns over Sanae Takaichi's election as the leader of Japan's ruling Liberal Democratic Party may slow the Bank of Japan's policy tightening, impacting the yen [5] - The collapse of Japan's governing coalition complicates Takaichi's ability to pass budgets or meaningful legislation, potentially leading to another election [5]

Group 1: Dollar Index and Economic Indicators - The dollar index (DXY00) fell by -0.58% due to retreating T-note yields and dovish comments from Fed officials supporting interest rate cuts [1] - The ongoing US government shutdown, now in its second week, is bearish for the dollar, with potential negative impacts on the US economy [2] - The University of Michigan US October consumer sentiment index fell to a 5-month low of 55.0, while 1-year inflation expectations unexpectedly decreased to 4.6% [3] Group 2: Federal Reserve and Interest Rate Outlook - Fed Governor Christopher Waller indicated a weak labor market and openness to quarter-point interest rate cuts in upcoming FOMC meetings [3][4] - St. Louis Fed President Alberto Musalem expressed a willingness for further interest rate reductions to counteract labor market weakening [4] - Markets are pricing in a 97% chance of a -25 basis point rate cut at the next FOMC meeting on October 28-29 [4] Group 3: Euro and ECB Commentary - The EUR/USD rose by +0.39% due to dollar weakness and hawkish comments from ECB officials regarding the appropriateness of current interest rates [5] - ECB Governing Council member Nagel stated that the current monetary policy stance is appropriate, indicating a high threshold for changes [6] - Kazaks from the ECB noted that they are neutral on rates as inflation remains contained, affirming the appropriateness of the current 2% rate [6]

Group 1: Dollar Index and Economic Indicators - The dollar index rose by +0.63%, reaching a 2.25-month high, supported by higher bond yields and weakness in stocks, which increased liquidity demand for the dollar [1] - Fed Governor Michael Barr's hawkish comments on a cautious approach to further Fed rate cuts contributed to the dollar's gains [1][3] - The ongoing US government shutdown, now in its second week, poses a bearish outlook for the dollar, with potential negative impacts on the US economy [2] Group 2: Euro and Yen Performance - The EUR/USD pair fell by -0.64%, hitting a 2.25-month low, primarily due to dollar strength and weaker-than-expected German trade data [5] - Political uncertainty in France is negatively impacting the euro, although President Macron's announcement of a new prime minister could mitigate the need for a snap election [5] - The yen is also under pressure due to political risks in Japan, benefiting the dollar [1] Group 3: Federal Reserve Outlook - New York Fed President John Williams indicated support for lower rates this year if economic conditions evolve as expected, with inflation projected to rise to around 3% and unemployment increasing beyond 4.3% [4] - The market is pricing in a 95% chance of a -25 basis point rate cut at the upcoming FOMC meeting on October 28-29 [4] Group 4: European Central Bank (ECB) Stance - The ECB's September meeting minutes were slightly hawkish, indicating a decision against an interest rate cut due to upside inflation risks [6] - Policymakers suggested that maintaining the current policy rate is warranted given the materialization of upside risks [6]

Group 1: Dollar Index and Economic Commentary - The dollar index (DXY00) has increased by +0.40%, reaching a 1.5-week high, driven by hawkish comments from Kansas City Fed President Jeff Schmid regarding the need to combat persistent inflation [1][3] - Political uncertainty in France and Japan is negatively impacting the euro and yen, thereby benefiting the dollar [1] - The ongoing US government shutdown, now in its second week, poses a bearish outlook for the dollar, with potential stagnation in GDP growth if the shutdown continues [2] Group 2: Eurozone Economic Indicators - The EUR/USD pair has decreased by -0.42%, remaining just above a 1.5-week low, influenced by signs of weakness in the Eurozone economy, particularly following a decline in German factory orders [4] - German factory orders for August unexpectedly fell by -0.8% month-over-month, contrasting with expectations of a +1.2% increase [5] - Market expectations for a rate cut by the European Central Bank (ECB) are minimal, with only a 1% chance of a -25 basis point cut at the upcoming policy meeting [5] Group 3: Japanese Yen Performance - The USD/JPY pair has risen by +0.44%, with the yen hitting a 6.25-month low against the dollar, primarily due to concerns over the election of Sanae Takaichi as the leader of Japan's ruling party [6] - Takaichi's election raises doubts about the Bank of Japan's (BOJ) timeline for policy tightening and increases concerns regarding a potential rise in debt supply due to her support for expanded financial stimulus [6]

Economic Indicators - The dollar index (DXY00) fell by -0.12% as the US government shutdown entered its third day, raising concerns about potential negative impacts on GDP growth and the dollar [1] - The September ISM services index dropped -2.0 to a 4-month low of 50.0, which was weaker than the expected 51.7 [3] - The September S&P composite PMI was revised upward by +0.3 to 53.9 from the previously reported 53.6 [2] Federal Reserve Commentary - Chicago Fed President Austan Goolsbee warned against front-loading too many interest rate cuts, citing rising inflation and deteriorating job numbers [4] - Dallas Fed President Lorie Logan emphasized the need for caution regarding further rate cuts, noting that inflation is further from the Fed's target than maximum employment goals [4] - Markets are pricing in a 97% chance of a -25 basis point rate cut at the next FOMC meeting on October 28-29 [5] Currency Movements - The EUR/USD rose by +0.22% due to a weaker dollar and supportive comments from ECB Governing Council member Wunsch regarding current policy settings [6] - The euro is supported by central bank divergence, with the ECB seen as largely finished with its rate-cut cycle, while the Fed is expected to cut rates approximately two more times by the end of the year [7]

Group 1: Dollar Index and US Labor Market - The dollar index (DXY00) recovered from early losses and is up by +0.23%, supported by higher T-note yields which strengthened the dollar's interest rate differentials [1] - The dollar initially declined due to the US government shutdown and signs of weakness in the labor market, with a report indicating that US employers have cut the most jobs this year since 2020 [2] - US September Challenger job cuts fell by 25.8% year-on-year to 54,064, with a total of 946,426 job cuts announced this year, the highest for the same period since 2020 [3] Group 2: Eurozone Economic Indicators - The EUR/USD pair is down by -0.17%, influenced by the dollar's rebound and an unexpected increase in the Eurozone's August unemployment rate [4] - The Eurozone's August unemployment rate rose by +0.1 to 6.3%, indicating a weaker labor market than expected [5] - ECB Governing Council member Kazaks stated that current ECB interest rates are appropriate, suggesting a pause in rate cuts [6] Group 3: Japanese Yen and Economic Outlook - The USD/JPY pair is up by +0.09%, with the yen losing overnight gains as T-note yields rose [7] - The Japanese consumer confidence index for September rose to a 9-month high, initially supporting the yen [7] - BOJ Deputy Governor Uchida indicated that the BOJ will continue to raise interest rates if the economic outlook improves, pushing the Japanese 10-year bond yield to a 17-year high of 1.674% [7]