US Dollar Strengthens to Highest Point in Half a Year

The greenback rose to a four-month high against the euro and a seven-month high against the Canadian dollar.

U.S. currency in Washington on Oct. 4, 2024. Madalina Vasiliu/The Epoch Times

The U.S. dollar strengthened to a six-month high on Nov. 4, regaining momentum toward the end of a raucous year for the chief global reserve currency.

As the U.S. financial markets were in a sea of red ink, traders sought shelter in the dollar.

The U.S. Dollar Index (DXY), a gauge of the greenback against a weighted basket of currencies like the Japanese yen and British pound, rose about 0.3 percent to above 100.00—the first time since mid-May.

The index has also pared some of its year-to-date losses. After falling as much as 11 percent, the closely watched gauge of the dollar is down about 7.7 percent.

Additionally, the trade-weighted U.S. dollar index—the broad index that the current administration monitors—has rebounded since hitting a bottom in early July.

Appearing at a CNBC event last month, Treasury Secretary Scott Bessent dismissed speculation that the currency’s selloff was driven by anti-dollar sentiment. Instead, Bessent said, to get ahead of President Donald Trump’s tariffs, there was a massive increase in the current account deficit, “so more dollars ended up overseas.”

“Now that we have a more formalized tariff regime, there’s not this big rush,” he said. “We’re seeing the U.S. current account deficit and trade deficit start to contract, so that should be very supportive for the dollar.”

In the second quarter, the current account deficit—when the United States spends more on foreign trade than it earns—plunged 43 percent from the previous quarter, supported by higher exports and a drop in imports.

In recent weeks, the greenback has made gains against other currencies as well. The dollar rose to a four-month high against the euro and a seven-month high against the Canadian dollar.

Market watchers have attributed various factors to the dollar’s rebound, including easing U.S.-China trade tensions, the Federal Reserve’s potential restraint on its easing cycle, and stabilizing employment conditions.

“Expect DXY to hang around near the top of its three-month range near 100.00/100.25, unless insights from the US jobs market can reprice a December Fed cut back to 100%,” ING strategists said in a Nov. 3 note.

China, Powell, and Jobs

In late October, Washington and Beijing agreed to a one-year trade truce, with the United States lowering average tariff rates on Chinese goods to 47 percent from 57 percent. The Chinese regime also agreed to purchase 12 million metric tons of U.S. soybeans through January and 25 million tons annually for the next three years.

The U.S. central bank followed through on back-to-back quarter-point rate cuts this past week. However, Fed Chair Jerome Powell suggested that a decline in the benchmark federal funds rate—a key policy rate that influences business and household borrowing costs—next month was not guaranteed.

“A further reduction in the policy rate at the December meeting is not a foregone conclusion,” Powell told reporters at the post-meeting press conference.

Since then, investors have been repricing their policy expectations. The futures market is betting on a 70 percent chance of a 25-basis-point cut in December, lowering the target range to 3.5 percent to 3.75 percent, according to the CME FedWatch Tool.

Traders are now looking to employment data that could cement a break in the rate-cutting cycle or put a cut back on the table.

Federal Reserve Chair Jerome Powell speaks at a news conference following the Federal Open Market Committee (FOMC) meeting in Washington on Oct. 29, 2025. Madalina Kilroy/The Epoch Times

“The monthly ADP jobs release will be a big market mover—and probably the biggest chance of the week for the dollar bear trend to restart,” the ING strategists said.

The payroll processor will release its October National Employment Report. The market consensus indicates that private-sector job growth will total 25,000. While this would be a reversal from the previous month’s loss of 32,000 positions, the figure would be below this year’s monthly average of approximately 55,000 new jobs.

Results from other private-sector data alternatives will be released this week.

The employment component of the Institute for Supply Management’s Services Purchasing Managers’ Index—a monthly survey highlighting the sector’s prevailing economic direction—will come out on Nov. 5.

Global outplacement firm Challenger, Gray & Christmas will also publish planned job cuts for October.

In the meantime, demand for labor has weakened as employment opportunities have slowed to their lowest level in more than four years, according to Indeed’s Job Postings Index.

State unemployment claims data indicate that employment conditions continue to slow, says Mark Hamrick, senior economic analyst at Bankrate.

“Private estimates taking state tallies into account suggest new jobless claims remain in the low- to mid-200,000 range, indicating a labor market that’s cooling but hasn’t fallen apart. Hiring has slowed somewhat, and layoffs have edged higher, but most workers remain secure in their jobs, for now,” Hamrick said in a statement to The Epoch Times.

Looking ahead, the next catalyst for the U.S. dollar could be the financial reserve of Treasury coffers, said Giuseppe Sette, president of AI investment analytics platform Reflexivity.

“It’s possible that if we get an impact on the Treasury coffers, then that’s going to knock bonds in a certain direction,” Sette said in a note emailed to The Epoch Times. “The more we see strong innovation in the dollar, the more we see uncertainty abroad and money flow back into the dollar, which is cheap now.”

The Treasury Department will release its quarterly refunding estimates on Nov. 5, outlining details of its financing plans for the upcoming quarter and auction sizes for the 3-, 10-, and 30-year bonds.

U.S. Treasury yields were red across the board on Nov. 4. The benchmark 10-year yield dipped about 2 basis points to around 4.09 percent.