FX.co ★ Dollar Extends Slide for Third Session

The dollar index dropped below the 98.5 mark on Thursday, marking its third consecutive decline. This downward trend was driven by heightened tensions in US-China trade relations, the ongoing government shutdown, and growing expectations of further interest rate cuts by the Federal Reserve, which collectively put pressure on the US dollar. In response to queries about the continuation of the trade conflict with China if no agreement is reached between President Trump and President Xi during their forthcoming meeting in South Korea, President Trump asserted, "We’re in one now." However, Treasury Secretary Bessent suggested that the current trade ceasefire could potentially be extended beyond three months, contingent upon Beijing holding off on implementing new export controls on rare earth minerals. Concurrently, the government shutdown, now in its third week, has delayed important economic data releases crucial for policy-making. In a speech given on Tuesday, Fed Chair Powell highlighted emerging signs of weakness in the labor market, reinforcing market expectations of a rate cut this month, followed by another in December, and potentially up to three additional cuts next year.