US dollar declines for several weeks amid prolonged shutdown concerns
Dollar Faces Tough Week Amid Global Economic Uncertainties
Dollar’s Performance Weakens Against Major Currencies
The U.S. dollar experienced significant losses against major global currencies this week. Concerns surrounding a potential U.S. government shutdown overshadowed market activities and delayed the release of pivotal economic data, including the September nonfarm payrolls report. Investors remained cautious as this uncertainty clouded prospects for the U.S. economy.
Yen and Euro Gain Ground
In trading activity, the yen pulled back from recent highs while the euro strengthened by 0.2% to $1.1743, marking its most successful week in a month. The Dollar Index, which tracks the greenback against a basket of major currencies, dropped 0.1% to 97.69—its poorest weekly performance since July.
- Sterling rose 0.3% to $1.3479, achieving its largest weekly gain since mid-August.
- Against the Swiss franc, the dollar dipped 0.3% to 0.7951 francs, representing its steepest weekly decline since mid-August.
Global Economic Outlook Remains Uncertain
The U.S. services sector revealed a slowdown in September, as the Institute for Supply Management’s non-manufacturing PMI fell to 50.0 from 52.0, signifying a halt in growth. This added to investor concerns following warnings from Bank of Japan Governor Kazuo Ueda about the uncertain global economic climate, which diminished hopes of an imminent rate hike.
Federal Reserve’s Rate Cut Prospects
Market analysts predict a 25 basis-point rate cut by the Federal Reserve in October, with broader expectations of nearly two rate reductions for the remainder of the year. Fed Governor Stephen Miran advocated for aggressive rate cuts, noting significant economic changes, while Dallas Fed President Lorie Logan maintained that inflation risks necessitate a cautious approach.
Bitcoin Surges to New Highs
In the cryptocurrency market, Bitcoin continued its upward trend, achieving its highest level since mid-August. It is currently valued at approximately $122,164.19, buoyed by favorable movements in U.S. equities and increased inflows into Bitcoin exchange-traded funds.
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