Dollar Remains Stable; Signals for Fed Rate Hike Strengthen

The US Dollar Index held relatively steady around 102 on Friday (October 30), following disappointing earnings reports from major technology companies. These results fueled concerns regarding the sustainability of the AI-driven stock market rally, prompting investors to seek safer assets. For the week, the dollar gained 0.2%, and it rose 0.5% over the course of October.

The dollar also found support in US economic data, which indicated growth stronger than previously anticipated. The US economy expanded at an annual rate of 3.4% in the third quarter, bolstered by robust consumer spending and AI-related investments. These conditions suggest that economic activity remains resilient, even as uncertainty surrounding the Federal Reserve’s future policy direction grows.

Regarding inflation, the US Personal Consumption Expenditures (PCE) price index rose by 0.5% in September—the largest monthly increase since March. This data reinforces expectations that the Federal Reserve could still raise interest rates in December. Although the central bank kept rates unchanged at its most recent meeting, the market currently assigns a roughly 72% probability of a rate hike in December.

Newsmaker Analysis: The dollar retains a relatively strong foundation, as a combination of solid US economic growth and persistent inflation sustains expectations for further tightening by the Federal Reserve. However, concerns surrounding the technology sector and an increased demand for safe-haven assets could lead to greater volatility in the dollar’s ​​performance in the near term. (arl)

Source: Newsmaker.id