The dollar index pulled back to 99.33, down from Thursday’s two-month high, as Fed speakers reinforced the likelihood of rate cuts despite some resistance internally. Fed Governor Christopher Waller said Friday that the central bank should remain “cautious” but confirmed his support for easing.
Fed fund futures are now pricing in a 95% probability of a 25 basis point cut in October, with odds of a second cut in December easing to 80%. The FOMC minutes released earlier this week showed general support for cuts, but less clarity on the pace, as inflation data remains incomplete due to the shutdown.
France and Japan Add to Global FX Volatility
The euro hovered near two-month lows at $1.15705, on pace for a 1.5% weekly drop, as political turmoil in France deepened. President Macron’s struggle to find a new prime minister capable of steering through a tightening budget has dented confidence in the eurozone’s second-largest economy.
Meanwhile, the yen remains under pressure, despite recovering slightly to 152.7 per dollar. It’s set for a 3.5% weekly decline—its worst in a year—on fading bets for a Bank of Japan rate hike following Sanae Takaichi’s political win. Finance Minister Kato acknowledged growing FX concerns but offered no concrete action.
