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: 2025.10.03
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US Dollar Index remains below 98.00 due to Fed rate cut bets, government shutdown
World FX news
Breaking news
US Dollar Index remains below 98.00 due to Fed rate cut bets, government shutdown
New
2025.10.03 16:12
2025.10.03 16:12
2025.10.03 16:12
- US Dollar Index may lose ground as weaker US labor data increased the likelihood of further Fed rate cuts.
- The US government shutdown is expected to continue into next week.
- Trump administration is considering taxpayer rebate checks of USD 1,000-2,000, funded through tariff revenues.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding ground after registering gains in the previous session and hovering around 97.90 during the early European hours on Friday. The US ISM Services PMI and the final S&P Global Services PMI reports are due later in the day.
The Greenback faced challenges after weakness in the US labor market boosted bets on further Federal Reserve (Fed) rate cuts. The CME FedWatch Tool suggests that markets are now pricing in a 97% chance of a Fed rate cut in October and a 91% possibility of another reduction in December.
Additionally, the US Dollar further loses ground amid ongoing concerns over the US government shutdown. The shutdown is expected to extend until next week. Senate Democrats are poised to vote against a GOP-backed short-term funding bill again tomorrow, and the Senate is unlikely to meet this weekend.
The partial US government shutdown is likely to delay the release of key US macro including the US September Nonfarm Payrolls (NFP) report. The US ISM Services PMI and the final S&P Global Services PMI reports are due later on Friday.
US President Donald Trump said Thursday his administration is weighing rebate checks of USD 1,000-2,000 for taxpayers, funded by revenue from new tariffs. Trump claimed tariff collections could eventually reach USD 1 trillion annually, while Treasury Secretary Scott Bessent projected a smaller but still significant figure of over USD 500 billion.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the 'de facto' currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world's reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed's 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed's weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Last updated
: 2025.10.03
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EUR/USD steadies as Fed divide offsets shutdown drag
EUR/USD consolidates on Friday amid a quiet trading session due to the lack of a fresh catalyst, sponsored by a US government shutdown that seems poised to extend beyond the current week. The pair trades at 1.1738, up 0.28%, at the time of writing.
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2025.10.04 06:12Fed's Miran insists Fed has room for more cuts
Federal Reserve (Fed) Board of Governors plant Stephen Miran doubled down on his belief that the Fed has a lot more room to cut its way to neutral interest rates.
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2025.10.04 04:59Fed's Jefferson nods to risks on both sides of the Fed's mandate
Federal Reserve (Fed) Vice President and Board of Governors member Phillip Jefferson acknowledged that ongoing risks to both sides of the Fed's policy mandates are seeing growing risks.
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2025.10.04 03:56Gold climbs as shutdown fuels haven demand, eyes record high
Gold price advances during the North American session on Friday, up by 0.70% for the day as the US government shutdown extends to three days, poised to end the week positively for the seventh straight week. At the time of writing, XAU/USD trades at $3,882 after hitting a daily low of $3,838.
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2025.10.04 03:54Fed's Logan warns inflation pressures persist, could be made worse
Federal Reserve (Fed) Bank of Dallas President Lorie Logan struck a nervous tone on Friday, warning that despite a rapidly-weakening labor market, a lot of potential policy moves could accidentally spark another round of renewed inflationary pressures.
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2025.10.04 03:49Dow Jones Industrial Average rises 300 points on Friday
The Dow Jones Industrial Average (DJIA) caught a firm bid on Friday, rising 482 points, or 1.04%, bottom-to-top. The Dow briefly pierced the 47,000 major price handle for the first time ever, before easing back to a more sedate +300 points (0.65%) on the day.
New
2025.10.04 03:44AUD/USD holds near 0.6600 as Greenback weakens on US shutdown and soft PMI data
The Australian Dollar (AUD) holds modest gains versus the US Dollar (USD) on Friday, supported by a weaker Greenback as the United States (US) government shutdown drags on and the ISM Services Purchasing Managers Index (PMI) softens.
New
2025.10.04 03:23EUR/USD holds modest bid amid US shutdown and mixed PMI readings
The Euro (EUR) trades with a modest bid against the US Dollar (USD) on Friday, with EUR/USD stuck in this week's range of 1.1750-1.1700.
New
2025.10.04 00:38GBP/USD rises as US shutdown prolongs, Fed data gap grows
The Pound Sterling advances some 0.26% on Friday as the US government began its third day of shutdown and skipped the release of Nonfarm Payroll figures for September. Purchasing Managers Index (PMI), data from S&P Global and ISM in the US, are the main drivers of price action.
New
2025.10.04 00:36EUR/JPY rebounds after dip to one-month low
The Euro (EUR) gains traction against the Japanese Yen (JPY) on Friday, recovering after briefly slipping to its lowest level since September 9 on Thursday. At the time of writing, EUR/JPY trades near 173.00, staging a modest rebound from recent lows.
New
2025.10.03 23:08Disclaimer:
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