- US Dollar Index may lose ground amid growing odds of a Fed rate cut in December.
- CME FedWatch Tool suggests pricing in an 87% chance of a 25-basis-point rate cut in December.
- Safe-haven demand softened amid ongoing discussions on a potential Ukraine-Russia peace deal.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding ground after three days of losses and trading around 99.60 during the Asian hours on Friday. However, the US Dollar (USD) could further lose amid rising odds of Federal Reserve (Fed) rate cut bets in December.
Traders are also anticipating three additional rate cuts by the end of 2026 after reports indicated that White House National Economic Council Director Kevin Hassett is the leading candidate for the next Fed chair. Traders see Hassett as aligned with US President Donald Trump’s preference for lower interest rates.
The CME FedWatch Tool suggests that markets are now pricing in a more than 87% chance that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, up from the 39% probability that markets priced a week ago.
The US Department of Labor (DOL) reported on Wednesday that Initial Jobless Claims fell to 216,000 for the week ending November 22, down 6,000 from the previous week’s revised figure. The result was stronger than the market expectation of 225,000. Meanwhile, the 4-week moving average eased by 1,000 to 223,750.
Safe-haven demand for the Greenback also eased amid ongoing talks over a potential Ukraine-Russia peace deal. Russian President Vladimir Putin indicated that proposals from US President Donald Trump could help shape future agreements and expressed readiness for further negotiations. Ukrainian President Volodymyr Zelenskiy noted that Ukrainian and US delegations will meet this week to refine a framework discussed in Geneva.
