US Dollar Index rises to near 99.00 due to safe-haven demand, FOMC Meeting Minutes eyed

• US Dollar Index climbs as safe-haven demand increases amid the ongoing government shutdown.
• President Trump threatened mass layoffs of federal workers as prospects for resolving the situation fade.
• The CME FedWatch Tool indicates pricing in nearly a 95% odds of a 25-basis-point Fed rate cut in October.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its gains for the third successive day and trading around 98.90 during the Asian hours on Wednesday. Federal Open Market Committee (FOMC) Minutes September's policy meeting will be eyed later in the North American session.

The Greenback continues to draw support from the increased safe-haven demand, driven by the ongoing government shutdown, with President Donald Trump threatening mass federal worker layoffs as prospects for a resolution dim. However, Democrats insist it will not sway them in the increasingly bitter shutdown standoff.

However, the prevailing dovish sentiment surrounding the US Federal Reserve (Fed) policy outlook may put downward pressure on the USD. The CME FedWatch Tool suggests that markets are now pricing in nearly a 95% chance of a 25-basis-point Fed rate cut in October and an 83% possibility of another reduction in December.

Federal Reserve (Fed) Board of Governors member Stephen Miran expressed his belief on Tuesday that inflation itself is simply a cause of "population increases". Monetary policy needs to ease to get ahead of the shift down in the neutral rate, Miran added.

Minneapolis Fed President Neel Kashkari struck a more reserved tone than some of his Fed counterparts on Tuesday, cautioning that it's still too soon to be able to tell if tariff-led inflation will be "sticky" or not. However, Kashkari noted that he's particularly bullish on the labor market and is expecting a return to form for American job creation, which has sputtered recently.