Dollar Dominance: Market Dynamics Amid Political Betting and Central Bank Moves

The U.S. dollar remains near a two-month peak, backed by speculation over the Federal Reserve’s interest rate strategies and increasing odds for a second Trump presidency. Meanwhile, skepticism grows around Chinese stimulus, affecting Aussie and Kiwi currencies as market participants adjust expectations for rate cuts worldwide.

The U.S. dollar remained strong against major currencies, nearing a two-month peak. Support came from expectations of moderate interest rate cuts from the Federal Reserve and rising betting odds for Donald Trump securing a second presidential term.

Notably, the euro weakened as the European Central Bank prepared to cut interest rates, while the yen faced caution from a Bank of Japan official. Concurrently, the Australian and New Zealand dollars declined due to skepticism about stimulus from China, their main trading partner.

Market participants are adjusting their outlook with recent resilient U.S. economic data and inflation figures. There is a 92% likelihood of a small rate cut at the upcoming Fed meeting, whereas the political betting landscape hints at a tight race, impacting currency stability.

(With inputs from agencies.)