Dollar Strengthens to Kick Off the Week

The dollar index held around 102 on Tuesday after rising for two straight sessions, as investors prepared for a busy week of economic data and the Federal Reserve’s upcoming policy announcement. Markets are pricing in roughly a 90% chance that the Fed will keep interest rates unchanged this week, while the probability of a rate hike in December stands at around 82%. Key data releases, including GDP growth and the PCE inflation index, will also be closely watched for clues about the outlook for monetary policy. Meanwhile, renewed market interest in the AI trade, spurred by Anthropic’s IPO filing, supported the dollar given the AI sector's boost to American economic growth. On the geopolitical front, fears that the US could resume strikes on Iran after the midterm elections continued to support safe-haven demand for the greenback.

The dollar index edged up to 101.9 on Monday, snapping a two-week losing streak as investors braced for a busy week of economic releases and the Fed’s monetary policy decision. The Fed is widely expected to leave interest rates unchanged this month, with markets focused on policymakers’ forward guidance, particularly any signals regarding a potential rate hike in December. Key data releases, including GDP growth and the PCE inflation index, will also be closely watched for clues about the outlook for monetary policy. Meanwhile, gains on Wall Street, supported by optimism surrounding Anthropic’s IPO filing, and falling oil prices provided additional support for the greenback. The dollar gained the most against the euro, pound and yen.

The US dollar index slipped to around 101.6 on Monday, extending its recent decline as investors awaited the Federal Reserve’s upcoming policy decision. The central bank is widely expected to leave interest rates unchanged before potentially raising them in December. Meanwhile, central banks in the Eurozone and Japan are also expected to maintain current rates, while policymakers in Canada and New Zealand are seen tightening monetary policy amid mounting inflationary pressures. Investors are also focused on key US economic releases this week, including PCE inflation data and preliminary third-quarter GDP figures, alongside earnings reports from major technology companies such as Amazon, Alphabet and Microsoft. These results could provide fresh insights into the strength of artificial intelligence demand, which has helped support US economic growth.