October was the second-best month of the year for the US dollar. The weakness of its main competitors, the hawkish rhetoric of the Fed, the continuing rally in stock indices and the confident US economy allowed the dollar index to record its strongest performance since July. The main outsiders among the G10 currencies on Forex were the Japanese yen and the British pound.
In the first half of the year, the US dollar lost about 10%. Investors believed that tariffs would accelerate inflation and slow economic growth. Coupled with Donald Trump’s pressure on the Fed, this would lead to an aggressive cut in the federal funds rate and capital flight from the US stock market. All these gloomy forecasts are slow to materialise. This allows investors to return to the greenback.
According to Jerome Powell, the Fed will not rush to cut rates. The shutdown is forcing the central bank to be…
