The dollar’s movement was also influenced by a rebound in oil prices, which rose by more than 3% following a sharp decline. The rise in energy costs has once again drawn market attention, as it could impact inflationary pressures and expectations surrounding the Federal Reserve’s monetary policy.
In the stock market, the technology sector faced renewed pressure. The S&P 500 technology sector fell by more than 6% as investors expressed concerns over the scale of corporate spending on artificial intelligence (AI) and the potential for stricter regulation. These developments have fueled fears that investment in AI infrastructure could slow down, potentially weighing on the outlook for US economic growth.
Meanwhile, labor market data provided a relatively strong signal. Initial jobless claims in the US fell by 6,000 to 189,000—coming in below the 196,000 forecast and matching a 57-year low previously recorded in July. This data reinforces the view that labor market conditions remain quite solid.
US worker productivity in the third quarter also grew faster than anticipated, helping to curb labor costs. This combination of data has kept the possibility of a Federal Reserve interest rate hike on the market's radar, even though expectations have softened. According to the CME FedWatch tool, the probability of at least a 25-basis-point rate hike in December stands at 66.1%, down from 79.9% a week earlier.
Separately, remarks from Federal Reserve officials indicate that the battle against inflation is still ongoing. Cleveland Federal Reserve President Beth Hammack believes further measures are still needed to bring inflation toward the 2% target, while Richmond Fed President Tom Barkin suggests that a gradual approach to interest rate adjustments remains reasonable.