Dollar Holds Steady as Rate Cut Speculation Swirls

The U.S. dollar remained stable despite investor speculation on a potential Federal Reserve rate cut. Dovish comments from Fed officials and the longest-ever U.S. government shutdown have influenced market expectations. The Japanese yen stayed weak amidst intervention concerns, while other currencies showed varied movements.

The U.S. dollar remained steady on Tuesday as investors weighed the possibility of a Federal Reserve rate cut next month. Comments from policymakers, cited as dovish, have fueled speculation about the central bank's actions, even as the yen stayed under intervention watch.

Fed Governor Christopher Waller indicated that the job market's weakness could merit another quarter-point rate cut. This comment, alongside New York Fed President John Williams's remarks, has led traders to predict an 81% chance of a rate cut next month, up significantly from the previous week's 42%.

While investors are adapting to rate-cut forecasts amid a data delay caused by the extended U.S. government shutdown, the dollar index held firm. Meanwhile, improved U.S.-China relations lifted sentiment, though the Japanese yen continued its weaker trend, posing potential intervention scenarios.

(With inputs from agencies.)