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On Tuesday, the dollar index (DXY00) fell by 0.12% ahead of the FOMC meeting concluding Wednesday, which is projected to result in a 25 basis point rate cut, lowering the federal funds target range to 3.75%-4.00%. The market anticipates a total of 115 basis points in rate cuts by the end of 2026, down from the current effective federal funds rate of 4.10%.
Key economic indicators included a 0.4% month-over-month increase in the August FHFA US house price index, exceeding expectations of a -0.1% decline. The October Richmond Fed manufacturing index rose 13 points to -4, surpassing the -12 forecast. The US consumer confidence index for October fell slightly to 94.6, still ahead of the anticipated 93.4.
The dollar is facing additional pressure from an ongoing US government shutdown that raises concerns about the economy, as well as positive developments in US-China trade relations, which led to reduced safe-haven demand. The tentative trade agreement suggests a halt to the US’s planned 100% tariffs on imports from China, paving the way for further negotiations at an upcoming summit.
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