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On Monday, the dollar index (DXY00) increased by +0.07%, aided by a +2.7 basis point rise in the 10-year T-note yield. The Federal Reserve Chair Jerome Powell indicated that a rate cut in December is not guaranteed. However, bearish indicators included a weaker-than-expected US manufacturing PMI report and dovish remarks from Fed officials, including Governors Miran and Cook.
Markets are currently pricing in a 67% probability of a 25 basis point cut to the fed funds target range during the FOMC meeting scheduled for December 9-10. The October ISM manufacturing index fell to 48.7, below the expected 49.5, contributing to negative sentiment for the dollar. Conversely, the final October S&P US manufacturing PMI was slightly revised upward to 52.5.
The strong dollar pressure also saw EUR/USD decrease by -0.16%, while USD/JPY rose by +0.12%. In commodities, December gold gained +0.44% to close at $17.50 higher, following a drop earlier in the month, although concerns about a stronger dollar and rising yields linger.
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