The dollar index held above the 99 points level on Thursday, consolidating gains from the previous session after hawkish remarks by Federal Reserve Chair Jerome Powell tempered expectations for further easing this year.
Treasury yields rose yesterday, with the 10-year yield stabilizing above the 4% mark as investors adjusted to a potentially less dovish policy outlook.
As expected, the Fed delivered a quarter-point rate cut.
Powell said policymakers remain divided over further action, stressing that another rate cut is far from a certainty amid mixed economic signals and limited data availability.
Markets quickly repriced expectations, assigning less than a 70% probability of another reduction in December, down from near certainty before the meeting.
Meanwhile, risk sentiment improved following the long-awaited meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea. The two leaders agreed to reduce certain tariffs, maintain rare earth exports, and increase US soybean purchases, steps seen as easing trade tensions after months of escalation. Trump described the discussion as “amazing,” while Xi said both sides had reached a consensus to resolve “major trade issues.”
The combination of a more measured Fed stance and constructive trade developments could paint a bullish short-term scenario for the greenback.
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