2025.10.3014:00:50UTC+00Dollar Continues to Gain

The dollar index experienced a strengthening for the second consecutive day, reaching 99.5 on Thursday. This came after remarks from Federal Reserve Chair Powell dampened expectations for further interest rate cuts. On Wednesday, the Fed implemented a 25 basis point reduction, as was anticipated, but Powell highlighted that a rate cut in December is not guaranteed. Consequently, market-implied probabilities for another reduction in December decreased sharply to around 68%, down from approximately 90% before the meeting. Investors had largely anticipated another 25 basis point cut in December, consistent with the Fed's September projections. In the meantime, the discussion between Presidents Trump and Xi concluded with the United States reducing overall tariffs on Chinese imports by 10%, bringing them down to 47%. Concurrently, Beijing committed to curtail fentanyl exports and to increase their purchases of U.S. soybeans. These developments were generally expected by markets. The U.S. dollar made its largest gains against the yen after the Bank of Japan decided to keep interest rates unchanged, leading to increased speculation that the central bank might abstain from making additional moves this year.