US Dollar Index posts modest losses to near 99.00 as Fed rate cut doubts emerge

• US Dollar Index softens to near 99.15 in Friday's Asian session. 
• Traders pared back bets of a Fed rate cut in December.
• Fed's Collins said the policy rate will likely need to stay on hold "for some time." 

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 positive note around 99.15 during the Asian trading hours on Friday. The DXY declines as traders brace for a backlog of US data following the government's reopening, which they expect will likely point to a weakening economy.

The federal government is reopening its agencies after US President Donald Trump signed the House-passed funding package on Thursday to end the record 43-day shutdown. The bill extends funding for most agencies until January 30 and includes three full-year funding bills for other parts of the government.

Analysts believe that the resumption of US economic data will show job market weakness and a potential slowdown, which could undermine the US Dollar across the board. The White House indicated on Thursday that the US Unemployment Rate for October may never be available due to the lack of a household survey that month.

Traders scaled back expectations of an imminent Federal Reserve (Fed) interest rate cut amid lingering uncertainty over inflation. Financial markets are now pricing in nearly a 51% odds that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, down from the 62.9% probability that markets priced in a day ago, according to the CME FedWatch Tool.

Nonetheless, hawkish remarks from the Fed officials might help limit the DXY's losses. Boston Fed President Susan Collins said that it will likely be appropriate to keep policy rates at the current level for some time to balance the inflation and employment risks in this highly uncertain environment. Meanwhile, Atlanta Fed President Raphael Bostic on Wednesday and Cleveland Fed President Beth Hammack on Thursday also expressed a preference for holding rates steady.