• The DXY, which measures the greenback’s strength against a basket of six key currencies, reached its highest levels since May.
• The index crossed the 100 mark, reaching its highest level since May this year, gaining in four of the last five sessions.
• The CME FedWatch data now shows a 39.6% chance of a 25 bps rate cut in December, down from 50.1% a week earlier.

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The U.S. Dollar Index (DXY) is holding firmly above its 200-day moving average on Thursday after crossing the mark on Wednesday, for the first time since March.

The index crossed the 100 mark, reaching its highest level since May this year, gaining in four of the last five sessions. The DXY measures the greenback’s strength against a basket of six key currencies: the euro, Japanese yen, pound sterling, Canadian dollar, Swedish krona, and Swiss franc. All six fell against the U.S. dollar on Thursday.

Why Is The Dollar Rising?

The dollar strengthened after the latest Federal Reserve minutes released on Wednesday indicated that a December rate cut is now less likely. The minutes showed that officials were split on whether the greater risk to the economy was a cooling labor market or high inflation.

The minutes showed that the Fed reduced interest rates last month despite internal concerns that easing policy could weaken efforts to bring inflation back to the 2% target, where it has exceeded for four and a half years.

Fed Chair Jerome Powell had emphasized after the meeting that another cut at the December meeting was not a “foregone conclusion.”

According to data from the CME FedWatch tool, there is a 43.8% probability of a 25-basis-point rate cut at the December 10 meeting. A week back, the figure stood at 50.1%.

Spot gold prices (XAU/USD) were lower at $4,080.91 per ounce on Wednesday, marking a 7% decline over the past month.

September Jobs Data

Traders also kept an eye on the latest September jobs data, which showed the U.S. economy added more jobs than expected. According to the BLS report, nonfarm payrolls increased by 119,000 in September, notably higher than the 50,000 expected by analysts, MarketWatch reported, citing Dow Jones estimates. The unemployment rate in September climbed to a four-year high of 4.4%, the highest since October 2021.

The Invesco DB US Dollar Index Bullish Fund (UUP), an exchange-traded fund (ETF) that tracks the Deutsche Bank U.S. Dollar Long Future Index, edged down 0.16%. 

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