DXY at two-week low as uncertainty surrounding Federal rate stance dampens sentiments

The dollar index dropped to a two week low on Friday, rolling back to near 99 mark, giving up much of the gains registered early this month, amid uncertainty whether key U.S. economic data will be released following the end of the longest government shutdown in U.S. history. Expectation that US economic data released after the end of the shutdown will reveal US labor market weakness weighs on the US Dollar. A record shutdown in US history ended on Thursday after Trump signed a funding bill to reopen the government. The White House indicated on Thursday that the US Unemployment Rate for October may never be available due to the lack of a household survey that month. This could leave the Federal Reserve to continue to be left "flying blind" with regard to the strength of the U.S. economy, White House official reportedly said.

Meanwhile, following the recent dovish stance by Fed officials, hawkish comments are emerging, which could likely limit losses in the greenback. Boston Fed President Susan Collins said that it will likely be appropriate to keep policy rates at the current level for some time to balance the inflation and employment risks in this highly uncertain environment. Meanwhile, Atlanta Fed President Raphael Bostic on Wednesday and Cleveland Fed President Beth Hammack on Thursday also expressed a preference for holding rates steady. The dollar index that measures the greenback against a basket of currencies is quoting at 99.11, with marginal gains on the day.

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