The dollar index remained steady at around 106.6 on Monday, holding near its highest levels in two years amid expectations of fewer Federal Reserve interest rate cuts and growing optimism about US economic outperformance under a potential Trump presidency.
Dollar hovers near two-year highs
Last week, Fed Chair Jerome Powell signaled that the central bank has no immediate plans to cut rates, citing the economy's resilience, a strong labor market, and persistent inflationary pressures. Stronger-than-expected retail sales and inflation reports further reinforced the hawkish outlook on Fed policy. While markets still anticipate a quarter-point rate cut in December, expectations for rate reductions through late 2025 have been pared back to 77 basis points, down from over 100 basis points just a few weeks ago.
Investors see Trump's moves
Additionally, investors are closely monitoring developments surrounding Donald Trump’s potential pick for Treasury Secretary, with Cantor Fitzgerald CEO Howard Lutnick and investor Scott Bessent emerging as leading candidates.
