Dollar Strengthens, But Threat of Interest Rate Cuts and US Shutdown Loom
The US Dollar Index (DXY) strengthened and traded around 99.00 during Thursday's Asian session, following losses in the previous session. This strengthening was driven by market optimism after President Donald Trump expressed his hope of reaching an agreement with Chinese President Xi Jinping at their meeting in South Korea next week. Several key issues, such as US soybean exports, nuclear weapons restrictions, and China's purchase of Russian oil, are expected to be discussed at the meeting.
However, on the other hand, there is news that the Trump administration is considering restricting technology exports using US software to China in response to Beijing's restrictions on rare earth metal exports. Furthermore, the prolonged US government shutdown has added to market uncertainty by delaying the release of key economic data such as Nonfarm Payrolls (NFP). This situation has fueled speculation that the Federal Reserve (The Fed) is likely to cut interest rates in the near future.
According to the CME FedWatch forecasting tool, the probability of a Fed rate cut in October is nearly 97%, with the probability of another cut in December at 96%. A Reuters survey also showed that a majority of economists predict the Fed will cut interest rates by 25 basis points to a range of 3.75%-4.00% at its monetary policy meeting later this month. This year, most economists expect the Fed to cut interest rates twice to ease economic pressures. (az)
Source: Newsmaker.id
