FX.co ★ Dollar Set for Weekly Fall on Economic Worries

The dollar index remained approximately at 99.2 on Friday, setting the stage for a second week of consecutive decline. This trend arises from concerns that the backlog of economic data from the United States—following the reopening of the government—might indicate a decelerating economy. The recent dip in the dollar coincided with a selloff in both U.S. stocks and bonds, signaling diminishing confidence in American assets amidst growing uncertainties. Earlier this week, President Donald Trump signed a short-term funding bill, effectively concluding the longest government shutdown in U.S. history and paving the way for the release of delayed economic reports. Nevertheless, the White House has indicated that some October data might never be disclosed, as certain agencies were unable to gather information during the shutdown, thereby compounding the uncertainty. Additionally, the market has reduced its assumptions regarding a Federal Reserve rate cut in December, now estimating about a 50% probability of a 25 basis point reduction, compared to over 95% last month. However, expectations for rate cuts next year remain unchanged.