31.10.202502:05:26UTC+00Dollar Heads for Monthly Gain

The dollar index hovered near its three-month peak at approximately 99.5 on Friday, poised for an almost 2% rise over the month as investors adjusted their expectations regarding further rate cuts by the Federal Reserve. On Wednesday, the Fed implemented a widely anticipated reduction of a quarter percentage point. However, Fed Chair Jerome Powell emphasized that another cut in December is not assured. Consequently, market-implied probabilities of a rate reduction in December sharply declined to about 75%, down from over 90% prior to the meeting. Meanwhile, the meeting between President Trump and President Xi concluded with the US agreeing to reduce tariffs on Chinese products. In response, Beijing committed to restrict fentanyl exports, increase purchases of US soybeans, and suspend controls on rare earth exports. In October, the dollar experienced its most significant monthly gain against the yen following the election of Prime Minister Sanae Takaichi, who supports expansionary fiscal policies and the continuation of lenient monetary policy.