Weekly Roundup: US dollar fluctuates as markets adjust Fed expectations

Amy Richards October 31st 2023 - < 1 minute read

The US dollar faced headwinds early last week as an uptick in US Treasury yields was seen as decreasing the likelihood of another Federal Reserve interest rate rise. 

USD was able to recover the following day after the latest US PMIs beat forecasts, unexpectedly returning to growth. A souring market mood also aided the safe-haven US dollar. 

On Thursday, the ‘greenback’ retreated against its stronger peers, despite a larger-than-expected acceleration in US GDP. The data cheered markets, easing global recession fears, thereby weighing on USD. 

The positive mood persisted into Friday, seeing USD end on a sour note. A cooldown in American core inflation added to the pressure on the US dollar. 

Turning to this week, all eyes are on the Fed’s upcoming rate decision. If the central bank delivers a hawkish hold – leaving rates unchanged but signalling another possible hike this year – then USD could climb. 

The non-farm payrolls report and ISM services PMI on Friday could also drive notable movement. A cooling labour market could dent USD, while a strong PMI reading may support it. 

Written by
Amy Richards

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