US Dollar Index (DXY) accelerates its decline, nearing 99.00 on risk appetite
- The DXY accelerated its reversal from last week's highs past 100.00 to levels near 99.00.
- Investors' optimism following the US government reopening is hammering the safe-haven USD.
- Dwindling hopes of a December Fed cut are failing to support the USD.
The US Dollar is the worst-performing G7 currency on Thursday. The Greenback is dropping against most of its peers, amid a relief rally following the US government's reopening, which has sent the USD Index to fresh two-week lows at 99.15 so far.
US President Donald Trump signed earlier on Thursday, which will allow for the restoration of the US government's funding, putting an end to the largest shutdown in history.
Investors are now awaiting a backlog of US macroeconomic figures that were scheduled during the 43-day blackout. The release calendar, however, remains unclear, and the White House warned that key releases, like October’s jobs and inflation reports, might not be published.
The market, however, is reassessing hopes of Fed easing in December, despite the ongoing divergences among the central bank’s committee members. Governor Stephen Miran reiterated the need to lower borrowing costs to support a weakening labour market, while Atlanta Fed President Raphael Bostic warned about serious trouble if inflation expectations in the medium and longer term drift forward.
Bostic's view seems to have prevailed, as futures markets are trimming bets of a Fed rate cut in December. The CME Group’s Fed Watch tool reveals that chances of a quarter-point cut next month declined to 54%, from 64% last week, and above 90% one month ago.
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
