The US Dollar Index (DXY) which tracks the performance of the greenback against six major currencies recovered on Friday after a sharp decline in the previous session, rebounding from near 99.80 during Asian trading hours. Market participants now turn their attention to the preliminary Michigan Consumer Sentiment Index, set to be released later in the day.
The dollar came under pressure after the latest Challenger Job Cuts report strengthened expectations that the Federal Reserve (Fed) could move to cut interest rates at its December policy meeting. Data from Challenger, Grey & Christmas showed that US employers announced more than 153,000 job cuts in October, marking the largest monthly reduction for this period in over two decades.
Adding to the headwinds, the prolonged US government shutdown continues to weigh on market confidence, reaching a record duration with no breakthrough in negotiations. The Senate has yet to schedule a vote on the House-passed bill to reopen the government after the measure failed to advance for the 14th time earlier this week.
Commenting on inflation dynamics, St. Louis Fed President Alberto Musalem noted on Thursday that risks remain tilted to the upside. He said that while current tariffs are exerting upward pressure on prices, their impact is likely to fade in the coming year.
Musalem also highlighted that long-term inflation expectations remain well anchored, with the US economy showing resilience despite growing uncertainty. Although labor market conditions have softened slightly, employment levels remain close to full capacity, he added.
Meanwhile, Washington is taking steps to ease trade tensions with Beijing. The US Trade Representative’s office announced plans to seek public input on a proposed one-year suspension of tariffs targeting China’s shipbuilding sector. The move signals a potential de-escalation in trade frictions between the world’s two largest economies, offering some relief to global markets.
