FX.co ★ Dollar Steadies as Govt Shutdown Nears End

The dollar index stabilized around 99.6 on Monday after a decline over the past three sessions. This stabilization comes amid optimism that a resolution to the prolonged government shutdown might be on the horizon. Senate Majority Leader John Thune indicated on Sunday that a federal budget agreement is forming, which could lead to the reopening of the government until January and help reverse some of the recent federal layoffs. Additionally, reports hinted that some Democrats might support the proposal even without the inclusion of extended health care subsidies, though there is still considerable uncertainty. The dollar faced downward pressure on Friday following a drop in the University of Michigan’s consumer sentiment index to its lowest point in nearly three and a half years. This decline is attributed to the ongoing government shutdown, persistent inflation, and deteriorating personal finances. In terms of monetary policy, the market remains polarized on the likelihood of the Federal Reserve cutting rates in December, with current trader forecasts indicating about a 67% probability of a quarter-point reduction, consistent with Friday's predictions.