The US Dollar Index (DXY) extended its decline for the fourth consecutive session on Friday, slipping toward the 98.00 level during Asian trading hours. The Greenback remains under pressure as a prolonged US government shutdown, increasing bets on further Federal Reserve (Fed) rate cuts, and renewed US-China trade tensions dampen investor sentiment.
The ongoing US federal government shutdown—now in its 16th day—is expected to extend into next week, delaying the release of key economic indicators that could shape future policy decisions. The Senate once again rejected a Republican-led proposal to extend temporary funding on Thursday, marking the tenth failed attempt to end the deadlock.
The extended impasse continues to weigh on market confidence and adds to the growing uncertainty surrounding the US economy.
Further pressuring the Dollar, Fed Governor Christopher Waller signaled support for another rate cut at this month’s policy meeting, reinforcing expectations of a more dovish policy stance. Newly appointed Fed Governor Stephen Miran echoed this sentiment, advocating a steeper rate-cut path through 2025 than currently projected by his peers.
Meanwhile, the Fed’s Beige Book highlighted rising economic headwinds, citing increased layoffs and weakening consumer spending among middle- and lower-income households.
Tensions between Washington and Beijing added to the bearish tone. US Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent sharply criticized China’s decision to tighten restrictions on rare earth exports, labeling the move as “economic coercion” and “a global supply chain power grab.”
Bessent warned that “if China wants to be an unreliable partner to the world, then the world will have to decouple.” Despite the harsh rhetoric, both officials acknowledged that it remains unclear whether Beijing will fully implement the export controls announced last week, according to a BBC report.
