Dollar Retreats on Fed Rate Cut Expectations

The dollar scale (DXY00) is down contiguous by -0.30%.  The dollar is retreating contiguous aft a study from Challenger showed US occupation cuts successful October surged +175% y/y by the astir successful 22 years, bolstering the outlook for the Fed to support cutting involvement rates.  Also, the dollar is inactive nether unit from the ongoing US authorities shutdown.  The longer the shutdown is maintained, the much apt the US system volition endure and the much apt the Fed volition person to chopped involvement rates.  The dollar recovered from its worst level contiguous aft stocks fell, which boosted liquidity request for the dollar.

US Oct Challenger occupation cuts surged +175.3% y/y to 153,074, the largest summation successful 7 months and the astir for an October successful 22 years.  Year-to-date occupation cuts person exceeded 1 million, the astir since the pandemic, and US employers person announced the fewest hiring plans since 2011.

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Comments contiguous from Chicago Fed President Austan Goolsbee were somewhat hawkish and supportive of the dollar, arsenic helium said that a deficiency of ostentation information during the authorities shutdown makes him much uneasy astir the Fed's ongoing involvement complaint cuts.

The markets are discounting a 69% accidental that the FOMC volition chopped the fed funds people scope by 25 bp astatine the adjacent FOMC gathering connected December 9-10.

EUR/USD (^EURUSD) contiguous is up by +0.35%.  Dollar weakness contiguous is pushing the euro higher.  The euro besides garnered enactment contiguous connected upbeat comments from ECB Vice President Guindos, who said the ECB is much optimistic connected Eurozone growth.  On the antagonistic broadside for the euro, Eurozone Sep retail income unexpectedly declined, and German Sep concern accumulation roseate little than expected.

Central slope divergence is supportive of the euro, with the ECB seen arsenic mostly finished with its rate-cut cycle, portion the Fed is expected to chopped rates respective much times by the extremity of 2026.

Eurozone Sep retail income unexpectedly fell -0.1% m/m, versus expectations of a +0.2% m/m increase.

German Sep concern accumulation roseate +1.3% m/m, weaker than expectations of +3.0% m/m.

ECB Vice President Guindos said, "The European system is showing a small spot of resilience, and maturation is amended than galore projected lone a mates of quarters ago." He besides said that the quality connected ostentation is positive, with gains successful work prices "behaving" overmuch better.