Dollar holds at 104, eyeing weekly gain amid rate cut outlook

The dollar index held steady around the 104 level on Friday after a decline in the previous session, positioning it for a fourth consecutive weekly gain amid moderated expectations for significant Federal Reserve rate cuts and speculation regarding a potential second term for former President Donald Trump.

Dollar holds at 104, eyeing weekly gain amid rate cut outlook

Recent data indicated further expansion in US private sector activity for October, driven by solid growth in the services sector, while the decline in manufacturing activity showed signs of easing. Several Federal Reserve officials have also emphasized caution before implementing further rate reductions, reinforcing the outlook for more measured 25 basis point cuts in upcoming meetings.

Market sentiment favors Trump, boosting dollar and treasury yields

Politically, market sentiment suggests Trump is likely to regain the presidency in November, contributing to upward pressure on the dollar and Treasury yields due to inflationary policies like increased tariffs and reduced taxes. The dollar is on track to register weekly gains against other major currencies, with particularly notable advances against the yen.