By Frank Walbaum, Market Analyst at Naga
The dollar index rose slightly on Thursday, supported by a broad rebound in US Treasury yields, with the 2-year and 10-year maturities recovering recent losses. The benchmark 10-year is once again approaching the psychological 4% level as investors brace for Friday’s delayed September inflation report, which could prove pivotal for short-term rate expectations amid the ongoing government data blackout.
The three-week US government shutdown continues to disrupt key releases and policy visibility, with President Donald Trump rejecting a meeting with Democratic leaders until a spending deal is reached.
Markets still anticipate a 25-basis-point rate cut next week, followed by another move in December, as the Federal Reserve navigates a weaker labor backdrop and trade uncertainty.
On the geopolitical front, Trump confirmed that his meeting with Chinese President Xi Jinping remains scheduled. Still, tensions linger, with Washington reportedly weighing new export restrictions in response to Beijing’s latest rare-earth measures. The dollar could experience heightened selling pressure if tensions continue to escalate.