FX.co ★ US Dollar Holds Rebound

On Friday, the dollar index surged above 98.4, marking its peak over the past month. This rise was driven by robust economic indicators, which tempered the extent of anticipated rate reductions by the Federal Reserve in the current cycle of monetary easing. In particular, the revision of the US GDP to a higher figure, alongside a drop in both initial and ongoing unemployment claims, countered apprehensions that a weakening labor market might necessitate a drastic easing response from the US central bank. This data emerged after comments from Fed Chairman Powell, who noted that while the Fed's focus has shifted towards addressing higher unemployment, the Federal Open Market Committee (FOMC) is not committed to a predetermined easing trajectory. The dollar's strength is further bolstered by lenient monetary policies from other major currencies; the Riksbank unexpectedly reduced its policy rate, and the Swiss National Bank (SNB) held its rate at 0%, cautioning of slower growth in the coming year. However, the dollar's upward momentum was somewhat restrained by ongoing concerns over a potential US government shutdown and the imposition of new tariffs on essential medical and pharmaceutical products.