The dollar index fell on Wednesday, extending losses for a second session after Federal Reserve Chair Jerome Powell’s remarks reinforced expectations for further monetary easing.
In his speech on Tuesday, Powell highlighted signs of a softening labour market and said policymakers remain attentive to downside risks, even as the ongoing government shutdown limits access to official data.
Markets are now fully pricing in a quarter-point rate cut at the October 28-29 meeting, another expected in December, and the prospect of further easing in 2026.
The greenback also came under renewed pressure from escalating trade tensions between Washington and Beijing. President Donald Trump accused China of “economic hostility”, reigniting fears of a broader trade confrontation, rattling global markets, and prompting investors to seek refuge in traditional safe-haven assets.
US Treasury yields continued to decline, with the 10-year note dropping to fresh one-month lows following Powell’s dovish comments. With the government still in shutdown, investors will closely monitor upcoming speeches from several Fed officials this week for additional clues on the policy outlook.
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