Dollar Faces Ninth Straight Decline as Fed Rate Cuts Anticipated

The U.S. dollar is on track for its ninth consecutive decline as traders increase their expectations for Federal Reserve rate cuts. This shift follows recent U.S. economic data and growing sentiments towards a more accommodating central bank. Fed Governor Christopher Waller indicated last week that the labor market’s current state might warrant an additional quarter-point rate cut in December. Meanwhile, Kevin Hassett, an economic adviser to the White House, has emerged as a leading candidate to succeed Jerome Powell as Fed chair, with Donald Trump announcing his choice early in 2026.

Kristina Hooper, chief market strategist at Man Group, expressed concern that an early announcement could create a “shadow Fed chair” situation, complicating the central bank’s ability to communicate effectively. “This could create some confusion for markets at a time when they need clarity,” she stated. Currently, markets are pricing in an 87 percent likelihood of a rate cut this month, a sharp increase from just 30 percent on November 19. With a December cut almost fully anticipated, attention is expected to shift towards the Fed’s future decisions, with markets forecasting a total of 88 basis points in cuts by December 2026.

Euro Strengthens Amid Ukraine Peace Talks

The euro gained 0.11 percent to reach $1.1639, buoyed by ongoing discussions surrounding peace in Ukraine. Investors are hopeful that progress in these talks could enhance energy security and reduce costs, thereby supporting the single currency. However, recent negotiations between Vladimir Putin and U.S. representatives did not yield a compromise on a potential peace agreement. Analysts suggest that if a ceasefire or complete peace settlement is achieved, the euro may strengthen further, particularly with expectations of increased defense spending in the Eurozone.

Despite inflation data exceeding expectations slightly, the European Central Bank is not anticipated to change its policy rate, with stability expected through early 2027.

Yen Weakens; Aussie Dollar Hits High

The Japanese yen fell 0.13 percent to 155.69 against the dollar. This drop follows a brief rise the previous day after signals from Bank of Japan Governor Kazuo Ueda suggested a potential rate hike later this month. Analysts have expressed doubt about whether a rate increase will be sufficient to reverse the yen’s ongoing weakening trend, particularly in light of Sanae Takaichi‘s leadership of the Liberal Democratic Party, which is likely to favor expansive fiscal policies.

Market observers note that if the yen approaches or breaches the 160.00 mark, intervention from Washington is likely, as U.S. Treasury Secretary Scott Bessent has repeatedly criticized the Bank of Japan’s policies for contributing to the yen’s undervaluation.

In contrast, the Australian dollar reached a peak of $0.6584, its highest since October 30, following GDP data that was slightly below expectations. The Reserve Bank of Australia is set to meet next week and is expected to maintain current interest rates.

In India, the rupee has faced pressure, breaching the closely monitored 90 per U.S. dollar threshold, influenced by weak trade and portfolio flows, despite robust economic growth in the country.

Additionally, the cryptocurrency market saw a rebound, with Bitcoin rising 2 percent to a two-week high of $93,633.70 after a difficult November. This resurgence follows a significant decline earlier in the month, where Bitcoin lost more than $18,000 amid a record outflow of capital from the market.