Dollar Index pauses rally; Beige book paints weak picture of US economy

The dollar index is trading slightly lower at 104.05, off previous day high of 104.41 although the index continues to stay heavily bid tracking US treasury yields that are riding high as volatility stays elevated ahead of US elections. Reduced expectations that Federal Reserve will go ahead with aggressive rate cuts as observed earlier is keeping momentum for the greenback high. Meanwhile, the Federal Reserves latest Beige Book survey of conditions across the country continued to paint a weak picture, with nine out of 12 regional district banks reporting flat or a slight decline in activity. Most districts reported declining manufacturing activity and consumers were reported to be on the hunt for bargains. According to the latest Beige Book, employment did increase slightly and layoffs remained limited. Wages continued to rise at a modest to moderate pace. The US dollar that measures the greenback against a basket of currencies, however, continues to hover around a three-month high. Among the basket currencies, EURUSD and GBPUSD are quoting at $1.08 and $1.29 respectively.

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