Dollar Index Drops As Soft Data Boost Rate-Cut Prospects

Dollar Index Drops As Soft Data Boost Rate-Cut Prospects


The dollar index, which measures the greenback against a basket of major currencies, fell to its lowest level in 5 weeks trading at 97.90, weighed down by soft economic data. The September Core Retail Sales dropped by 0.1% to signal that the US economy could be struggling. The recently-released data raised the chances of an interest rate cut by the Federal Open Market Committee later this month. The CME FedWatch tool is showing a probability of 90% the Fed will cut interest rates by 25 basis points on October 30. The US 10-year yields declined to 1.716%, the USDJPY dipped to 108.55, and the EURUSD rallied to a five-week high of $1.1085.


The British pound lost ground against rivals as hopes of reaching a Brexit deal slip Away. The Democratic Unionist Party of Northern Ireland is still opposing the current suggestions by the EU and UK negotiators. Since last Thursday, the sterling pairs were vulnerable to headlines concerning Brexit. Most EU leaders showed their willingness to reach a proper Brexit deal to avoid a disorderly Brexit. The GBPUSD is currently trading below $1.28 after testing a five-month high of $1.2877 on positive headlines yesterday.


Gold prices surged as soft US data revived the chances of further monetary policy easing by the Federal Reserve later this month. Numerous central banks adjusted their monetary policy in the past month, hoping to boost their economies. These easing measures supported the money flow to the precious metal. The price of a gold ounce rose to a high of $1492, the price of a silver ounce edged higher to $17.43, and palladium posted a fresh record high of $1786.


Oil prices continued to trade in a tight range as market participants awaited fresh fundamental drivers. The American Petroleum Institute reported a buildup of 10.500 million barrels in US oil stock last week, driving prices to the bottom of the range. The US Energy Information Administration will report the official figures later today. The West Texas Intermediate crude futures dropped to $52.75, and Brent futures declined to $58.80.

Major Economic Events

GMT Country Event Expectation Previous



Retail Sales (MoM) (Sep)





Building Permits (Sep)





Philadelphia Fed Manufacturing Index (Oct)





Industrial Production (MoM) (Sep)





Crude Oil Inventories




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