The dollar index (DXY00) on Wednesday fell from a 1-week high and finished down by -0.04%.  The dollar relinquished early gains on Wednesday and turned lower after a Reuters report stated that the Trump administration is considering broad restrictions on exports to China made with US software in retaliation for China's latest round of rare earth export restrictions.  The ongoing shutdown of the US government is also bearish for the dollar.  The longer the shutdown is maintained, the more likely the US econ ...

The dollar index (DXY00) today is up by +0.07% at a 1-week high.  Weakness in the British pound today is a supportive factor for the dollar after a weaker-than-expected UK Sep CPI report knocked (GBP/USD) down to a 1-week low.   The dollar also has carryover support from Monday, when US-China trade tensions eased after President Trump said, "I think we're going to be fine with China."  Gains in the dollar are limited as the ongoing shutdown of the US government is bearish for the dollar. The longer the s ...

The dollar index (DXY00) today is up by +0.30% at a four-session high. The dollar is moving higher today on weakness in the yen, which has fallen to a one-week low against the dollar, as expectations rise that new Japanese Prime Minister Takaichi will maintain an expansionary fiscal policy.  The dollar also has carryover support from Monday, when US-China trade tensions eased after President Trump said, "I think we're going to be fine with China."  Gains in the dollar are limited after the Oct Philadelph ...

Core Insights - The dollar index rose by +0.48% to a 1.5-week high, driven by hawkish comments from Federal Reserve officials and political uncertainty in France and Japan [1] - The ongoing US government shutdown poses a bearish outlook for the dollar, with potential negative impacts on GDP growth [2] - The euro fell by -0.50% to a 1.5-week low due to signs of weakness in the Eurozone economy and political turmoil in France [5] - The yen declined by +1.00% against the dollar, reaching a 7.5-month low, influenced by concerns over Japan's monetary policy under new leadership [7] Federal Reserve Insights - Kansas City Fed President Jeff Schmid emphasized the need for continued monetary policy measures to combat high inflation [3] - Minneapolis Fed President Neel Kashkari warned against drastic interest rate cuts, citing stagflationary signals in the data [3] - Markets are pricing in a 93% chance of a -25 basis point rate cut at the upcoming FOMC meeting [4] Eurozone Economic Indicators - German factory orders unexpectedly fell by -0.8% month-over-month, contrary to expectations of +1.2% [6] - Political instability in France, following the resignation of Prime Minister Lecornu, is contributing to the euro's decline [5] Japanese Economic Context - The election of Sanae Takaichi as the leader of Japan's ruling party raises concerns about delayed monetary policy tightening by the Bank of Japan [7] - Takaichi's victory has led to fears of increased debt supply due to her support for expanded financial stimulus [7]

Currency Market - The dollar index (DXY00) is up by +0.44% at a 1-week high, driven by the resignation of French Prime Minister Lecornu, which negatively impacted the euro [1] - The ongoing US government shutdown, now in its second week, is bearish for the dollar, with potential negative implications for GDP growth [2] - The USD/JPY has increased sharply by +1.72%, with the yen falling to a 2-month low following the election of pro-stimulus lawmaker Sanae Takaichi as the likely new Japanese prime minister [6] Eurozone Economic Indicators - The EUR/USD is down by -0.37%, reaching a 1-week low due to political turmoil in France after Prime Minister Lecornu's resignation [4] - The Eurozone's October Sentix investor confidence index rose by +3.8 to -5.4, exceeding expectations of -7.7, providing some support for the euro [5] - Eurozone August retail sales increased by +0.1% month-over-month, aligning with expectations [4] Precious Metals Market - December gold is up by +64.60 (+1.65%), reaching a new contract high, while nearest-futures gold hit an all-time high of $3,944.00 per troy ounce [7] - December silver is also up by +0.585 (+1.22%), with nearest-futures silver achieving a 14-year high [7]

Group 1: Dollar Index and Federal Reserve Comments - The dollar index (DXY00) recovered from early losses, finishing up by +0.11% due to hawkish comments from Federal Reserve officials [1] - Dallas Fed President Lorie Logan indicated she may not support a rate cut at the upcoming FOMC meeting, citing inflation above the 2% target [4] - Chicago Fed President Austan Goolsbee emphasized the need for caution regarding rate cuts, noting the US economy is still growing solidly [4] Group 2: Labor Market and Job Cuts - The dollar initially declined as the US government shutdown continued and signs of labor market weakness emerged, with significant job cuts reported [2] - In September, job cuts fell by 25.8% year-over-year to 54,064, but total job cuts announced this year reached 946,426, the highest for the same period since 2020 [3] - The year-to-date job additions from January to September were nearly 205,000, marking the weakest stretch since 2009 [3] Group 3: Market Expectations and Euro Impact - Markets are pricing in a 98% chance of a -25 basis point rate cut at the next FOMC meeting on October 28-29 [5] - The euro (EUR/USD) fell by -0.06% as the dollar's rebound weighed on it, compounded by an unexpected increase in the Eurozone's unemployment rate [6] - Hawkish comments from ECB officials initially supported the euro, but overall economic news turned bearish for the currency [6]

Core Viewpoint - The dollar index has declined due to weak labor market expectations and concerns over a potential US government shutdown, while the euro has strengthened supported by positive economic indicators and central bank divergence. Group 1: Dollar Performance - The dollar index (DXY00) fell by -0.22% on Monday, influenced by speculation regarding weak US labor market news prompting potential interest rate cuts by the Fed [1] - The dollar's decline was also affected by the risk of a US government shutdown, which is weighing on market sentiment [1] - Despite the decline, the dollar recovered slightly after August pending home sales rose by +4.0% month-over-month, exceeding expectations of +0.4% [2] Group 2: Labor Market and Fed Outlook - The September Dallas Fed manufacturing activity survey unexpectedly fell by -6.9 to -8.7, indicating weaker manufacturing activity than anticipated [3] - Comments from Fed officials were mixed, with New York Fed President suggesting a lower interest rate stance due to receding inflation risks, while Cleveland Fed President indicated inflation may not reach the Fed's 2% target until late 2027 or early 2028 [4] - Markets are pricing in an 89% chance of a -25 basis point rate cut at the next FOMC meeting on October 28-29 [4] Group 3: Euro Performance - The EUR/USD rose by +0.23% on Monday, driven by a weaker dollar and supportive economic news from the Eurozone [5] - The Eurozone's September economic confidence index unexpectedly rose by +0.2 to 95.5, surpassing expectations of 95.3, which bolstered the euro [6] - ECB Governing Council member Makhlouf stated that the ECB is "near the bottom" of its rate-cutting cycle, indicating a more hawkish stance compared to the Fed [7]

Economic Indicators - The US Q2 GDP was revised upward to +3.8% (quarter-over-quarter annualized), exceeding expectations of no change at +3.3% [2] - Q2 personal consumption was also revised upward to +2.5%, stronger than the expected +1.7% [2] - The Q2 core PCE price index was unexpectedly revised upward to +2.6%, surpassing expectations of no change at +2.5% [2] Labor Market - Weekly initial unemployment claims fell by -14,000 to a 2-month low of 218,000, indicating a stronger labor market than the anticipated increase to 233,000 [3] - Kansas City Fed President Jeff Schmid noted that the labor market remains largely in balance despite signs of cooling [4] Capital Spending - August core capital goods new orders (excluding defense and aircraft) rose by +0.6% month-over-month, stronger than expectations of no change [3] Federal Reserve Policy - Comments from Kansas City Fed President Jeff Schmid suggest that the Fed may not need to lower interest rates soon, maintaining a "slightly restrictive" policy stance to combat high inflation [4] - Markets are pricing in an 86% chance of a -25 basis point rate cut at the next FOMC meeting on October 28-29 [4] Currency Market - The dollar index rose by +0.64% to a 3-week high, driven by hawkish US economic reports and comments from Fed officials [1] - The EUR/USD fell by -0.65% to a 3-week low, influenced by the dollar's strength and geopolitical tensions between Russia and NATO [5]

Group 1 - The dollar index rose by +0.03% due to increased safe-haven demand from geopolitical risks in Europe, particularly after Poland shot down Russian drones [1] - The dollar's gains were limited as bond yields declined following a weaker-than-expected US August PPI report, which solidified expectations for a 25 basis point rate cut by the Fed at the upcoming FOMC meeting [1][4] - The US final-demand August PPI eased to +2.6% year-on-year from +3.1% year-on-year in July, which was below expectations of +3.3% year-on-year [3] Group 2 - Markets are currently pricing in a 100% chance of a 25 basis point rate cut and a 12% chance of a 50 basis point rate cut at the upcoming FOMC meeting on September 16-17 [4] - Following the anticipated 25 basis point rate cut at the September meeting, markets are discounting a 79% chance of a second 25 basis point cut at the October 28-29 meeting [4] - Overall, markets are pricing in a total reduction of 74 basis points in the federal funds rate by year-end, bringing it down to 3.64% from the current 4.38% [4] Group 3 - The EUR/USD fell by -0.09% due to escalating geopolitical risks in Europe, particularly after Poland's actions against Russian drones [5] - The euro is under pressure as geopolitical tensions rise, with long liquidation and position squaring affecting the currency ahead of the ECB meeting [5] - Losses in the euro were somewhat mitigated after the dollar slipped following the weaker-than-expected US August PPI report [5]

Group 1 - The dollar index (DXY) has recovered from a 1.5-month low, increasing by +0.08% due to higher T-note yields strengthening interest rate differentials and prompting short covering in the dollar [1] - Preliminary benchmark payroll revisions indicated a loss of -911,000 jobs in the US through March 2025, which is a wider loss than the expected -700,000, signaling a weaker labor market [3] - The markets are now pricing in a 10% chance of a 50 basis point rate cut at the upcoming FOMC meeting on September 16-17, a significant shift from previous expectations of zero chance [4] Group 2 - The euro (EUR/USD) fell by -0.21% from a 1.5-month high due to the dollar's rebound, compounded by a significant decline in French manufacturing production [5] - French manufacturing production for July decreased by -1.7% month-over-month, which was worse than the expected decline of -1.2% and marked the largest drop in 14 months [6]