The US Dollar Index (DXY), which tracks the US dollar’s value against six major currencies, is on the rise, currently hovering around 99.00 during the Asian trading session on Thursday. This increase follows a rebound from recent losses.
The dollar received a boost after President Donald Trump suggested on Wednesday that he anticipates some productive discussions with Chinese President Xi Jinping in South Korea next week. These talks are expected to tackle various topics, including U.S. soybean exports, nuclear weapons regulations, and China’s acquisition of Russian oil.
On a different note, Reuters reported that the Trump administration may be looking at a wider strategy to limit exports to China of products that involve US software—ranging from laptops to jet engines—following Beijing’s recent restrictions on rare earth exports.
The US dollar could potentially decline again, especially since the ongoing government shutdown is delaying the publication of crucial US economic metrics, such as nonfarm payrolls (NFP). This uncertainty is affecting both financial markets and the Federal Reserve. At present, markets are anticipating a nearly 97% likelihood of a rate cut by the Fed in October, followed by a 96% chance of another cut in December, based on data from the CME FedWatch tool.
A Reuters poll indicates that 115 out of 117 economists expect the Fed to reduce its monetary policy by 25 basis points (bp) to a rate of 3.75-4.00% during its announcement on October 29. Looking ahead to 2020, 83 economists expect two rate cuts, while 32 anticipate just one.
