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Federal Reserve officials cautiously suppressed expectations of interest rate cuts, and the dollar was supported by optimism!
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Hello everyone, today XM Forex will bring you "[XM Forex Platform]: Federal Reserve officials cautiously spoke out to suppress interest rate cut expectations, and the US dollar is supported by optimism!". Hope this helps you! The original content is as follows:
Asian market conditions
The U.S. dollar index continued to fall during the day, falling below the 100 mark. As of now, the U.S. dollar is quoted at 99.80.

RevelioLabs, a private data provider in the United States: Non-farm employment in the United States decreased by 9,100 in October; the number of layoffs by challenger www.xmserving.companies in the United States increased by 175% year-on-year in October, and the number of layoffs during the year increased by 65% year-on-year; data from the Chicago Fed showed that the unemployment rate in October was approximately 4.36%, a four-year high.
Federal Reserve officials continue to remain cautious. Chicago Fed President Goolsby believes that there is a lack of reliable inflation data and is cautious about cutting interest rates; Cleveland Fed President Hammack emphasized the risk of inflation and opposed further interest rate cuts; however, Governor Milan continues to expect the Fed to cut interest rates in December; New York Fed President Williams believes that the US neutral interest rate based on models is estimated to be around 1%. Director Barr noted that the impact of artificial intelligence may be hitting hiring in some industries.
Trump: No new tariffs will be announced while the Supreme Court is hearing the tariff case. Americans must be able to buy medicines at the lowest prices in the world. There are plans to visit India at Modi's invitation, possibly next year.
US House Speaker Johnson: Today is “not as optimistic as yesterday” about resolving the government shutdown.
US media: People familiar with the matter said the Trump administration is not currently attacking Venezuelaplan and lacks the legal basis to do so.
Summary of institutional views
TS Lombard: The Federal Reserve lacks the need to carry out "self-service" interest rate cuts because...
The Federal Reserve interest rate resolution held last week reinforced our long-held view: the Federal Reserve will not enter automatic interest rate cutting mode, and the market's current probability of suspending interest rate cuts in December is still low. We believe that the current U.S. labor market may be at or near the peak of weakness. www.xmserving.companies are likely to respond to the holiday season by forcing existing employees to be more "productive" rather than hiring new ones. As the cost of tariffs is gradually passed on to consumers, www.xmserving.companies will regain hiring space after the pressure on profit margins eases.
Judging from the recently released data, there are no signs of further deterioration in the job market. If this trend continues, and in the context of unresolved inflationary pressures, radical interest rate cuts are obviously inappropriate and will not help improve structural problems in the job market (including the tightening of immigration policies and the impact of artificial intelligence, etc.). In this scenario, those Fed officials who emphasize that further interest rate cuts may stimulate inflation will gain more say. In addition, we believe that there are no major imbalances in the U.S. economy (household debt service ratios are near historical lows, default rates are stabilizing, and leverage levels are extremely low) that would trigger a sustained recession.
Societe Generale: The U.S. dollar rebound may be boosted by optimism
This spring, there are three interrelated factors that have caused the dollar to weaken: first, the market is concerned that U.S. trade policy will lead to a significant slowdown in economic growth; second, the market expects that this will lead to the Federal Reserve significantly easing monetary policy (by April, the market expects interest rates to fall by 1% this year; so far, the Fed has cut interest rates twice by 25 basis points, and the market is no longer sure whether there will be a third rate cut); third, the market believes that the U.S. government wants the dollar to weaken.
However, since May, market participants have generally raised their expectations for U.S. GDP this year and next. We prefer to examine the two years together because the impact of tariffs on trade flows is reshaping GDP in 2025 (suppressing imports) and boosting GDP in 2026. The dollar's recovery is built on growing optimism about the U.S. economy. Over the longer term, the dollar is likely to remain strong if the U.S. economy continues to grow at a much faster rate than its major rivals. Because the Fed's interest rates will be higher than those in other countries, at least until the United States changes the direction of fiscal policy.
www.xmserving.commerzbank: It is expected that the U.S. dollar will be difficult to push the euro below this level, and at present... it is still a key constraint
The easing of trade tensions is good for all participants, and the central bank is now able to formulate monetary policy in an environment with reduced uncertainty. It is worth mentioning in particular that the U.S. tariff policy is also controversial domestically, and its legal basis has been repeatedly questioned. Yesterday, the U.S. Supreme Court held a hearing on the legality of President Trump’s emergency tariffs, but the final ruling is expected to take until the spring of 2026.
Although the Federal Reserve last weekThe unexpectedly hawkish stance forced the market to adjust interest rate cut expectations and pushed the U.S. dollar to strengthen, but the EURUSD failed to effectively fall below 1.1480. We believe that the dollar's sustained rise requires the support of important economic data. However, the government shutdown has led to a continued lack of data. The deepening divisions within the Federal Reserve have also made it difficult for the market to price in further reductions in interest rates, which has restricted the dollar's upside.
The U.S. ISM manufacturing index released on Monday fell to 48.7 from 49.1, showing that the manufacturing industry is still in deep weakness. In the absence of key data such as the labor market, it is difficult for the U.S. dollar to effectively push the euro against the U.S. dollar below the important psychological mark of 1.15. The upcoming Federal Reserve meeting in December is particularly critical. If more data can be supported by then, the statements of Federal Reserve officials will be of more reference value. After the government shutdown ends, the centralized release of backlogged data will help the market quickly reshape expectations, but how the Fed will ultimately interpret this information is still unknown, which will constitute major market suspense.
UBS: The U.S. dollar is stronger than expected, but will still pull back in the www.xmserving.coming weeks
The U.S. government shutdown has now entered its seventh week. Preliminary estimates show that if the shutdown continues until mid-November, it may reduce U.S. GDP by as much as 1.5% in the fourth quarter, bringing it close to zero growth. Historically, government shutdowns have had a limited impact on the economy, lasting about 8.5 days on average. However, we have long believed that the longer the shutdown lasts, the greater the adverse impact on the economy.
As the longest shutdown in U.S. history, sentiment data in October began to reflect a gloomier outlook. The ISM manufacturing index has been below 50 for the eighth consecutive month, while the performance of the services sector has recovered slightly. With official labor market reports (including non-farm payrolls and the unemployment rate) unable to be released, private sector data from ADP and Challenger suggest that the labor market remains weak, which we believe should prompt the Fed to cut interest rates in December.
Nonetheless, the dollar has strengthened in recent days. This may be partly attributed to funding pressures in U.S. dollar money markets, prompting investors to return to U.S. dollar assets. It is reported that hedge funds also appear to be taking advantage of the current momentum to further push up the dollar.
Finally, in the first Supreme Court hearing on the legality of the International Emergency Economic Powers Act (IEEPA) tariffs, the justices showed considerable skepticism. We expect the verdict to be handed down in December or January. While the dollar has firmed up more than we expected, we still expect a pullback in the www.xmserving.coming days and weeks on weaker U.S. data and a repricing of expectations for the December Fed meeting.
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