The U.S. dollar index continues its decline as concerns about credit market risks intensify

On October 17, spot gold was trading around US$4,320.62 per ounce. Gold prices continued to hit record highs on Thursday, approaching US$4,380 per ounce. As trade tensions intensified and the U.S. government shut down, investors flocked to gold as a safe haven. The credit market was hit by three suspected fraud incidents, exacerbating concerns about deeper cracks.

The U.S. dollar fell on Thursday, falling against major currencies including the euro, yen and Swiss franc for a third straight session, amid trade tensions and markets assessing zgykf.cnments from Federal Reserve officials.

The U.S. dollar fell 0.49% against the Swiss franc to 0.793. Fed Governor John Waller said he agreed to cut interest rates again at the Fed's policy meeting later this month amid mixed readings on job market conditions.

New Fed Governor Milan reiterated his support for a more aggressive path of interest rate cuts in 2025 than some of his colleagues support.

The Fed's Beige Book offered little support for U.S. interest rates, pointing to emerging signs of economic weakness, including increased layoffs and reduced spending by low- and middle-income households.

The U.S. dollar index, which measures the U.S. dollar against six other currencies, fell 0.33% to 98.35. U.S. Treasury yields are hovering near multi-week lows, with the benchmark 10-year note yielding just above 4%, weighing on the dollar as investors also weigh the possibility of a prolonged U.S. government shutdown.

Weller said that the U.S. government shutdown is expected to last nearly 40 days, and we are in a state of standstill here. The longer the shutdown lasts, the greater the impact on the economy. I agreeFrench Prime Minister Le Corny survived two no-confidence votes in parliament as lingering trade tensions put traders in the awkward position of deciding how the issues will be resolved, winning a temporary reprieve for his days-in-power government and a chance to deliver a budget for the euro zone's second-largest economy. Le Corny had promised earlier this week to suspend President Macron's controversial pension reforms. The euro hit a one-week high, rising 0.36% to $1.1688.

European market

The goods trade surplus between the Eurozone and the rest of the world was 1.0B euros, down from 3.0B euros in the same period last year. Exports fell -4.7% year-on-year to €205.9B, while imports fell -3.8% year-on-year to €204.9B.

At the wider EU level, the situation is even weaker. The EU recorded a deficit of EUR-5.8B in August, which expanded from -2.4B in the same month last year. Exports fell by -6.7% year-on-year, and imports fell by -4.9% year-on-year.

From the perspective of bilateral flows, the EU's exports to the United States fell by -22.2% year-on-year, while imports from the United States only fell by -1.9% year-on-year. The EU's trade surplus fell from 6.5B euros in the same period last year to 15.3B euros.

Trade with China is also weak, with exports falling by -11.3% year-on-year and imports falling by -7.1% year-on-year, but the euro deficit narrowed slightly to -28.8B.

In contrast, trade with the UK remains relatively resilient - exports fell only slightly by -1.2% year-on-year, while imports fell by -8.5% year-on-year, leaving the EU's surplus with the UK relatively stable at €13.4B.

The British economy grew moderately by 0.1% month-on-month in August, in line with expectations, indicating that economic activity remains sluggish but stable. Industrial production rose 0.4% month-on-month, helping to offset a flat performance in the dominant services sector and a -0.3% month-on-month contraction in the construction sector.

On a three-month basis, GDP as of August increased by 0.3% zgykf.cnpared with the previous three months. Details are mixed: Services output rose 0.4%, maintaining its role as the main driver of growth, while production fell -0.3% and construction grew -0.3%.

U.S. market

Federal Reserve Governor Milan said today that he will support a 50 basis point interest rate cut at the upcoming policy meeting, believing that monetary policy is still too strict given the heightened risks of Sino-US trade tensions.

In an interview with Fox Business Channel, Millan said that escalating trade uncertainty has increased downside risks to growth and that the Federal Reserve must take preemptive action to cushion the economy.

"If monetary policy remains restrictive and a shock like this hits the economy, it does significantly increase the negative consequences of such a shock," he warned.

The outlook for growth next year will depend largely on whether trade risks "materialize or resolve" in the zgykf.cning weeks, Milan added.

BeautyEven without official employment data, available evidence points to a clear slowdown in hiring across the U.S. economy, Federal Reserve Governor Christopher Waller told Bloomberg. He noted that private and survey-based indicators have been consistent in pointing to weak labor demand, reinforcing the view that the job market is losing steam.

Waller believes that this background supports the Federal Reserve's continued 25 basis point interest rate cut in a controlled manner, and emphasized that it remains cautious in the face of high uncertainty.

"We don't know which direction this is going to break," he said. "If the labor market rebounds, there will be less pressure to cut interest rates - you don't want to make a mistake."

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