FX.co ★ Dollar Holds at May-Highs

On Wednesday, the dollar index held steady at 100.2, maintaining its highest level since May. Investors exhibited caution regarding the possibility of another Federal Reserve rate cut in December. Mixed signals from Federal Reserve officials and a hawkish stance from Chair Powell the previous week have tempered market sentiment. Currently, the likelihood of a 25-basis-point reduction in the federal funds rate next month is approximately 63%, a decrease from nearly 90% prior to last week’s Federal Open Market Committee (FOMC) decision. Economic indicators have also bolstered the dollar, as the ADP report indicated stabilization in the labor market following two months of job losses, and the ISM services PMI reached its highest level in eight months. Nonetheless, the ongoing government shutdown, now the longest in U.S. history, continues to impede the release of critical public data. The dollar showed strength mainly against the yen and the pound, while it remained relatively unchanged against the euro, the Canadian dollar, and the Swiss franc.