The dollar index fell below 98.5 on Thursday, sliding for the third straight session as escalating US-China trade tensions, the prolonged government shutdown, and expectations of further Federal Reserve rate cuts weighed on the greenback. When asked whether the US would remain in a trade war with China if President Trump and President Xi fail to reach an agreement during their upcoming meeting in South Korea, Trump replied, “We’re in one now.” Still, Treasury Secretary Bessent hinted at the possibility of extending the current trade truce beyond three months if Beijing suspends plans for new export controls on rare earth minerals. Meanwhile, the government shutdown entered its third week, delaying key economic data releases that could inform policy decisions. Fed Chair Powell highlighted signs of labor market weakness in a Tuesday speech, reinforcing market bets on a rate cut this month, another in December, and as many as three more next year.
