The US dollar held strong tonight after posting sharp gains throughout the week, although it has begun to correct slightly amid global stock market volatility. The US Dollar Index briefly touched a nearly six-month high before settling around 100.3 in Friday's trading, marking a gain of around 0.9% in the last five sessions.

The dollar weakened slightly against the yen after Japanese officials reiterated warnings about possible intervention, sending USD/JPY down slightly to the 157 area. However, against most other major currencies, the dollar remained strong.

The dollar's strength this week was supported by diminishing expectations of an aggressive Fed interest rate cut. The FOMC meeting minutes and comments from several central bank officials indicated that many members were leaning towards keeping interest rates high for longer, leading the market to reduce expectations of a major rate cut in December.

Although market participants again raised the possibility of a rate cut tonight following New York Fed President John Williams' statement that there was room for a rate cut "in the near term," the dollar overall remains supported by relatively high US bond yields and economic data that is not considered weak enough to warrant aggressive easing.

For developing countries like Indonesia, the combination of a persistently strong dollar and global market volatility poses additional challenges to exchange rate stability and capital flows. Bank Indonesia data shows the rupiah exchange rate remains under pressure against the US dollar, in line with the weakening of several other Asian currencies, which are being pressured by the strengthening dollar and concerns about a global economic slowdown. Risk-off sentiment in global stock markets and uncertainty about the Fed's interest rate path have led market participants to remain cautious, making the dollar's movements a key focus tonight for foreign exchange and commodity market players.

Source: Newsmaker.id