The dollar is consolidating near a seven-week high, and investors are reassessing their positions

Minneapolis Federal Reserve President Neel Kashkari said Monday that he believes the economy is resilient and that the labor market, despite some signs of weakness, remains strong, and the Fed's interest rate cut is designed to maintain that resilience.

"The balance of risk has shifted from high inflation to a possible rise in unemployment," Kashkari said at the Association of Bank Holding Companies' fall symposium. "That's why I think a policy reversal is the right move."

When asked about Vice Presidential candidate Vance's claim that housing inflation is linked to immigration, Kashkari said his recent comments were based on logic rather than research.

In the post-epidemic era, under-construction, supply chain disruptions, and labor market supply shortages have all driven home prices up, Kashkari said. "I also speculate that one thing we know very well is that more people means more people need places to live... I haven't seen a more detailed analysis other than this logical reasoning that more people means more housing demand."

(One-hour chart of the US dollar index)

The dollar held near a seven-week high on Monday, closing at 102.48, as investors reassessed their positions following last week's strong US jobs data and fears that Middle East tensions could spill over into a wider conflict fuelled buying of safe-haven assets. The dollar, which hit 102.69 on Friday, was the highest since mid-August and rose more than 2 per cent on a weekly basis last week, its biggest gain in two years.

The closely watched September jobs report showed the largest increase in non-farm payrolls in six months, the unemployment rate fell and wages rose solidly, prompting the market to scale back bets on further sharp US interest rate cuts. After the jobs data was released, the market expected the Federal Reserve to cut interest rates by only 25 basis points in November instead of 50 basis points.

foreign exchange trading platformBrian Daingerfield, a market FX strategist, said: "Looking at some of the more risk-sensitive currencies in the G10 group, the US dollar has indeed generally strengthened, but many of the traditional safe-haven currencies - the Japanese yen, the Swiss franc and the US dollar - have performed relatively well today."

He also said: "This does reflect a slight decline in the stock market, further increases in oil prices, and the market is closely monitoring developments in the Middle East."