Last week’s light run of US data pointed to firm activity alongside rising inflation pressures. The October flash composite PMI dipped a touch yet stayed close to a five-year high, while selling prices accelerated to their fastest pace since 2022, a combination that keeps attention on the Federal Reserve’s inflation problem.
Dollar Sensitivity to Equity Markets
Moves in the dollar were tied more to equity market behaviour. A limited wobble in AI-linked stocks appears to leave the currency exposed, whereas the greenback tends to regain support during broader equity sell-offs, reinforcing its role as a preferred safe-haven currency.
Outlook for Federal Reserve Policy
Policy expectations centre on the Fed holding rates on Wednesday, with scrutiny on any dissents and on December guidance, where a hike remains in play. Thursday’s GDP and PCE releases are expected to reinforce the view that growth remains hot, even as the dollar’s response to favourable US news has become less reliable and short-term downside risks have increased.
