US Dollar Index strengthens above 99.50 ahead of US Manufacturing PMI release

• US Dollar Index trades with mild gains near 99.75 in Monday's early Asian session.
• Traders dialed back bets for further Fed rate cuts, supporting the US Dollar. 
• The US October ISM Manufacturing PMI data will be in the spotlight later on Monday. 

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, trades on a stronger note around 99.75 during the Asian trading hours on Monday. The DXY edges higher on the hawkish stance from the US Federal Reserve (Fed). Traders brace for the release of the US October ISM Manufacturing Purchasing Managers' Index (PMI) report later on Monday. 

The US central bank decided to cut the interest rates by 25 basis points (bps) at its October meeting last week, as expected. However, Fed Chair Jerome Powell hinted that it may be the central bank's last reduction for the year, citing the risk of making additional moves without a more robust picture of the economy. 

Meanwhile, Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack stated on Friday that they would have kept interest rates on hold instead of cutting the federal funds target range by a quarter point to 3.75-4.0%. Kansas City Fed President Jeff Schmid noted that he favored no rate cut at the last meeting, as he's more concerned that inflation is "too high" than he is about the labor market. Hawkish remarks from Fed officials boost the US Dollar across the board. 

Traders have pared back expectations for a Fed cut in December and are now pricing in roughly 68% odds of a move, down from a 93% chance a week ago, according to the CME FedWatch tool. 

Republicans and Democrats remained at a stalemate on the government shutdown over the weekend as it headed into its sixth week, and it appears likely to become the longest in US history. Concerns over the ongoing US federal shutdown could drag the DXY lower.