The US dollar ended the month of October with its second best monthly performance this year, in light of the absence of official data that caused uncertainty about the path of the US economy and the direction of the Federal Reserve’s monetary policy. The Bloomberg Dollar Spot Index rose for the third day in a row, bringing October gains to 1.6%\u200b\u200b\u200b\u200b. The US currency received support this week after statements by Jerome Powell, chairman of the Federal Reserve Board, who indicated that the reduction of interest rates during the current year is “not at all certain.” In contrast, the currencies of other advanced economies, such as the euro, British pound and Japanese yen, are affected by domestic challenges. The rise of the US dollar. Jayati Bharadwaj, a strategist at TD Securities, said: “We expect the rise in the US dollar to continue for a bit longer in the absence of major US data, and attention is focused on developments abroad. There are a lot of financial and electoral risks starting from France, then Japan, then the UK.” Read more: Dollar hits highest level since August amid rising trade tensions. The current year has been generally bad for the US dollar, as the index recorded its worst first-half performance since 1973, after US tariff policies caused turmoil in the foreign exchange market, which is worth $9.6 trillion a day. However, this October’s rise reduced the dollar’s annual losses to less than 7%. At the same time, the shutdown of the federal government – which entered its thirty-first day – helped to support the US currency, with it unclear when the basic economic indicators will be released before the next US Federal Reserve meeting next December. Parsh Upadhyaya, director of fixed income and currency strategies at Pioneer Investments, said: “The absence of US data has made it difficult for investors to predict the direction of the US economy. I see indications that the US economy will bottom out in the fourth quarter, with strong prospects for accelerating growth in 2026.” Bets on a fall in the dollar Some investors betting on a fall in the dollar began to change their positions, as Morgan Stanley analysts turned to a neutral position against the currency yesterday, pointing to “the solidity of US growth and the possibility of an increase in expectations for the minimum financing interest rate at the Federal Reserve,” and they no longer recommend building positions in the euro or the Japanese. See also: The most prominent takeaways from the Federal Reserve’s decision to cut interest rates. In Europe, the British government faces pressure to raise income tax to plug a growing gap in public finances, while the financial crises in France prompted Fitch and S&P Global to cut the country’s sovereign credit rating. As for Japan, the new prime minister, Sunai Takaichi, ordered an economic package to deal with the rising cost of living, contributing to the yen’s decline as investors expected increased government spending. In the United States, the Federal Reserve cut interest rates by a quarter of a percentage point, in line with expectations, while both the European Central Bank and the Bank of Japan kept interest rates unchanged this week. The euro fell to its lowest level since the beginning of August, hitting around $1.1540, while the British pound hit its weakest levels since last April. As for the Japanese yen, yesterday it fell to its lowest level against the dollar since last February, with the absence of any signs of tighter monetary policy at the Bank of Japan. Asian currencies Asian currencies were also among the worst performers against the dollar this month, as the yen was the biggest loser after falling about 4% against the US currency, while the South Korean won – which is one of the most risk-sensitive currencies in the region – fell more than 1.7%, amid investor concerns about Seoul’s $350 billion pledge negatively affecting the United States investor. confidence. Also read: Bets on the yen to fall to 160 against the dollar by the end of this year Claudio Peron, an emerging Asia fixed-income strategist at Bank of America, wrote in a note: “Changes in short-term interest rates are the biggest factor behind the pressure on currencies, as Asian central banks cut rates at a faster pace than the Federal Reserve.” Traders expect the US dollar’s gains to continue through the end of this year and the beginning of 2026, as one-month risk-reversal contracts indicate the highest levels of optimism regarding the US dollar since mid-October, while 3-month risk-reversal contracts also indicate strength in the greenback.<\/p>\n","protected":false},"excerpt":{"rendered":"
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