FX.co ★ Dollar Holds Decline

The US dollar index hovered around 102 on Friday after falling in the previous session, lagging behind other safe-haven assets such as government bonds and precious metals in the wake of the recent selloff in technology and artificial intelligence stocks. Markets are increasingly pricing in a potential cooling of the AI-driven capital expenditure boom, which has been a major engine for the US economy and financial markets. At the same time, investors continued to evaluate the Federal Reserve’s monetary policy outlook, as stronger-than-expected US economic data bolstered expectations of further interest rate hikes. Futures markets now imply roughly a 72% probability that the Fed will leave rates unchanged this month, while the odds of a December rate increase have climbed to 92%. Cleveland Fed President Beth Hammack cautioned that the central bank may need to tighten policy more aggressively if public inflation expectations were to deteriorate significantly.