The US Dollar Index (DXY) held steady around 99.50 during the Asian session on Friday (October 31st). The greenback's movement was slight as market expectations for a Fed interest rate cut strengthened. According to the CME FedWatch Tool, the probability of a December rate cut is at 71%, up from 66% the day before, although still down from a peak of nearly 91% after Fed Chair Jerome Powell emphasized that further action would be data-dependent given the limited official data due to the US government shutdown.

At its Wednesday meeting, the Fed cut interest rates by 25 basis points to 3.75%-4.00% by a 10-2 vote. The decision was not unanimous: Stephen Miran pushed for a 50-bps cut, while Jeffrey Schmid voted to hold rates. Powell emphasized that the central bank is balancing its dual mandate—inflation and employment—while cautioning that a December cut is not yet certain.

From a geopolitical perspective, the Trump-Xi meeting resulted in an agreement: the US lowered tariffs on Chinese goods from 57% to 47%, while China pledged to limit fentanyl exports, increase purchases of US soybeans, and suspend restrictions on rare earth exports. For the market, this agreement has the potential to ease trade tensions and support risk sentiment, but the dollar's direction will still be largely determined by the Fed's policy narrative and subsequent economic data. (az)

Source: Newsmaker.id