FX.co ★ Dollar Eases as Risk Appetite Improves

The dollar index declined to approximately 100 on Thursday, pulling back from over five-month highs as increased risk appetite dampened the demand for the safe-haven currency. Nonetheless, positive US economic indicators and the Federal Reserve's cautious approach towards further policy easing provided support for the dollar. The ADP report disclosed that US private employers hired more workers than anticipated in October, while the ISM Services PMI climbed to its highest level in eight months. Despite this, the ongoing government shutdown—the longest in US history—continues to delay the publication of essential official data. Simultaneously, traders reduced their expectations for a rate cut in December following mixed signals from Federal Reserve officials. Currently, the probability of a 25 basis point reduction is assessed at only 62%, a decrease from over 90% prior to last week’s FOMC decision. The dollar experienced a decline against all major currencies, with the euro and yen recording the most significant gains.