The US Dollar Index (DXY), which gauges the US dollar’s (USD) value compared to six major currencies, has bounced back after a nearly 0.5% drop earlier and was trading around 99.80 during Asian hours on Friday. Later today, many eyes will be on the preliminary figures for the Michigan Consumer Confidence Index.
The dollar has been under pressure following a report from Challenger regarding job cuts, which led to speculation about potential interest rate reductions by the Federal Reserve at its upcoming December meeting. Challenger, Gray & Christmas revealed on Thursday that over 153,000 jobs were eliminated in October, marking the highest monthly reduction in more than two decades.
With a government shutdown in the US stretched further without a clear end in sight, there’s concern the dollar might continue to decline to unprecedented lows. The Senate has not scheduled a vote on the government reopening bill passed by the House after failing, for the fourteenth time, on Tuesday.
St. Louis Fed President Alberto Moussallem remarked late Thursday that inflation risks still lean upward. He noted that while tariffs are currently driving prices higher, their effect is expected to lessen next year. Long-term inflation expectations, he believes, remain solid. Despite a recent softening in the labor market, Moussallem emphasized it’s still close to full employment and expressed some optimism about the economy’s resilience amid ongoing uncertainties.
In a significant move, the US government is working towards lifting penalties on China’s shipbuilding sector, which could ease trade tensions between the two largest economies. The Office of the United States Trade Representative has invited public feedback regarding the potential suspension of tariffs on imports from China for a year.
