The dollar index (DXY00) on Tuesday fell by -0.24%. The dollar gave up its overnight advance and turned lower after ECB President Lagarde’s upbeat comments pushed the euro higher and weighed on the dollar. The ongoing shutdown of the US government is bearish for the dollar. The longer the shutdown is maintained, the more likely the US economy will suffer, a negative factor for the dollar. Losses in the dollar accelerated after dovish comments from Fed Chair Powell reinforced expectations that the Fed will cut interest rates at the October 28-29 FOMC meeting.
The dollar initially moved higher on Tuesday on a flight to safety as stocks slumped due to the escalation of US-China trade tensions. Additionally, weakness in the British pound benefited the dollar on Tuesday after weak UK labor news pushed GBP/USD down to a two-month low.
