Dollar heads for monthly gain

The dollar index held near three-month highs around 99.5 on Friday and was poised to rise nearly 2% for the month as investors dialed back expectations for further Federal Reserve rate cuts.

The Fed delivered a widely anticipated quarter-point reduction on Wednesday, but Chair Jerome Powell stressed that another move in December is not guaranteed.

Market-implied odds of a December cut fell sharply to about 75% from over 90% before the meeting.

Meanwhile, the Trump-Xi meeting ended with the US agreeing to lower tariffs on Chinese goods, while Beijing pledged to curb fentanyl exports, boost US soybean purchases, and pause rare earth export controls.

The dollar posted its biggest monthly gains against the yen in October following the election of Prime Minister Sanae Takaichi, who favors expansionary fiscal measures and continued loose monetary policy.