Dollar Nears Weekly Gains as Shutdown Outlook Brightens, Rate Cut Bets Persist
NEW YORK – Teh dollar index edged towards a slight weekly increase, rising 0.14% to 99.81, poised for a 0.08% gain for the week, as markets assessed the potential end of the US government shutdown and shifting expectations regarding Federal Reserve policy.
Barclays analysts predict a 60% probability the shutdown – the longest in US history – will conclude between November 11 and 21, compared to a 15% chance of it extending into December. Despite this optimism, traders have increased bets on a rate cut, with Fed funding futures indicating a 65% chance of a cut at the December 10 meeting, according to CME Group’s FedWatch tool.
This move comes despite caution from Chicago federal Reserve Bank President Austin Goolsbee, who stated on Thursday that the lack of inflation data due to the shutdown “increases his caution” about further cuts. “When visibility is blurry, we have to be more careful and move slowly,” Goolsbee told CNBC.
The dollar benefited from a flight to safe-haven assets earlier in the week, though the Japanese yen remains the preferred defensive option. The dollar rose 0.23% against the yen to 153.41 yen, recovering from a low of 152.82 yen recorded October 30.
Simultaneously occurring, the euro fell 0.1% against the dollar to $1.1535, but outperformed other European currencies like the British pound and Swiss franc.
Global economic indicators also influenced currency movements. Chinese exports unexpectedly fell in October,marking their largest decline as February,signaling challenges in diversifying away from the US market and potentially increasing pressure on European markets. The Australian dollar remained stable at 0.6480 US dollars, while the New Zealand dollar (Kiwi) fell 0.4% to 0.5609 US dollars.
Markets focused on technology stocks are tracking toward their largest weekly losses in seven months. The euro is supported by expectations of stable interest rates,while the US and UK are anticipated to continue cutting rates into 2026.
