The US Dollar Index (DXY), which tracks the USD’s performance against six major currencies, held steady around 99.60 during Asian trading on Friday, following three days of losses. Yet, there’s a chance the dollar might decline further as the likelihood of a Federal Reserve interest rate cut in December grows.
Market participants are also anticipating three additional rate cuts by the end of 2026. This follows news that Kevin Hassett, Director of the White House National Economic Council, is the leading candidate to succeed the current Fed chairman. Traders suspect that Hassett aligns with President Donald Trump’s push for lower interest rates.
Currently, market predictions indicate over an 87% probability that the Fed will lower the overnight borrowing rate by 25 basis points at the December meeting. This is a sharp increase from a mere 39% just a week ago, as reflected by the CME FedWatch tool.
In a related update, the U.S. Department of Labor revealed on Wednesday that there were 216,000 new jobless claims for the week ending November 22, which is a decrease of 6,000 from the previous week’s adjusted number and better than the anticipated 225,000. The four-week moving average also dipped slightly by 1,000 to reach 223,750.
The demand for the dollar as a safe-haven asset has also softened, especially with ongoing discussions regarding a potential peace agreement between Ukraine and Russia. President Vladimir Putin has indicated a willingness to continue negotiations, hinting that proposals from President Trump could facilitate a future agreement. Additionally, Ukrainian President Volodymyr Zelenskiy announced that Ukrainian and U.S. delegations are set to meet this week to refine the framework to be discussed in Geneva.
