Group 1: Dollar Index and Economic Indicators - The dollar index (DXY00) fell to a 2-week low, closing down by -0.79% due to fears of trade confrontations between the US and European allies [1] - The Federal Open Market Committee (FOMC) is anticipated to cut interest rates by approximately -50 basis points in 2026, contributing to the dollar's underlying weakness [3] - The Federal Reserve has increased liquidity in the financial system by purchasing $40 billion a month in T-bills since mid-December, further pressuring the dollar [4] Group 2: European Economic Data - The euro (EUR/USD) rose to a 3-week high, finishing up by +0.63%, driven by dollar weakness and positive economic expectations from Germany [5] - The German ZEW survey expectations for economic growth increased by +13.8 to a 4.5-year high of 59.6, surpassing expectations of 50.0, which is bullish for the euro [5] - German December Producer Price Index (PPI) fell by -2.5% year-on-year, which was weaker than the expected decline of -2.4% year-on-year, marking the steepest decline in 20 months [6]

Core Viewpoint - The dollar index is experiencing a decline due to threats to the Federal Reserve's independence, particularly following comments from Fed Chair Powell regarding potential criminal charges from the Justice Department related to his testimony on Fed renovations [1][2]. Group 1: Federal Reserve Actions - Fed Chair Powell indicated that the Justice Department has issued grand jury subpoenas threatening criminal charges related to his June testimony on Fed headquarters renovations [2]. - Powell emphasized that the threat of criminal charges stems from the Fed's commitment to setting interest rates based on public interest rather than presidential preferences [2]. - The Federal Reserve is expected to cut interest rates by approximately 50 basis points in 2026, contributing to the dollar's underlying weakness [3]. Group 2: Market Reactions - The dollar index (DXY00) is down by 0.32%, reflecting market concerns over the Fed's independence and potential changes in leadership [1]. - The euro (EUR/USD) has risen by 0.35%, supported by the Fed's situation and an increase in the Eurozone's investor confidence index to a six-month high [5]. - Markets are currently pricing in a 5% probability of a 25 basis point rate cut at the upcoming FOMC meeting scheduled for January 27-28 [2]. Group 3: Future Expectations - The Federal Reserve has begun purchasing $40 billion a month in T-bills to boost liquidity in the financial system, which is also putting pressure on the dollar [4]. - Concerns are growing that President Trump may appoint a dovish Fed Chair, which could further negatively impact the dollar [4]. - National Economic Council Director Kevin Hassett is viewed as the most likely candidate for the next Fed Chair, perceived as the most dovish option by the markets [4].

Group 1: Dollar Index and Economic Indicators - The dollar index (DXY00) fell to a 1.75-month low, down by -0.55%, influenced by the FOMC's decision to cut the federal funds target range by -25 basis points and increase liquidity through $40 billion monthly T-bill purchases [1] - US weekly jobless claims rose by +44,000 to a 3-month high of 236,000, indicating labor market weakness, which is dovish for Federal Reserve policy [4] - The US September trade deficit unexpectedly shrank to -$52.8 billion, the smallest in 5.25 years, contrasting with expectations of a widening to -$63.1 billion [4] Group 2: Market Reactions and Future Expectations - The markets are pricing in a 24% chance of another -25 basis point cut in the federal funds target range at the upcoming FOMC meeting on January 27-28 [4] - Concerns about President Trump's potential appointment of a dovish Fed Chair have added bearish sentiment towards the dollar, with Kevin Hassett being viewed as the most dovish candidate [3] Group 3: Euro and Yen Performance - The euro (EUR/USD) rose to a 2.25-month high, up by +0.46%, supported by dollar weakness and positive comments from ECB President Lagarde regarding potential economic growth forecast increases [5] - The yen (USD/JPY) decreased by -0.60%, benefiting from a weaker dollar and improved business confidence in Japan, with Q4 BSI large manufacturing confidence reaching a 1-year high [6]

Group 1: Dollar Index and Economic Indicators - The dollar index (DXY00) is down by -0.33% at a 2-week low, influenced by the strength of the yen and expectations of a Fed rate cut [1] - The US Nov ISM manufacturing index unexpectedly fell -0.5 to a 4-month low of 48.2, weaker than the expected increase to 49.0, indicating economic contraction [3] - The markets are pricing in a 100% chance of a 25 basis point cut in the fed funds target range at the upcoming FOMC meeting on December 9-10 [3] Group 2: Federal Reserve and Leadership Speculation - The dollar is under pressure due to speculation regarding Kevin Hassett as a potential candidate to succeed Jerome Powell as US Fed Chair, which is seen as bearish for the dollar [2] - Hassett's nomination could raise concerns about Fed independence, as he supports President Trump's approach to interest rate cuts [2] Group 3: Euro and ECB Policy - The EUR/USD is up by +0.32% at a 2-week high, supported by a weaker dollar and hawkish comments from ECB officials [4] - ECB Governing Council member Nagel stated that Eurozone interest rates are currently in a good place, indicating a divergence in central bank policies [4][5] - The Eurozone Nov S&P manufacturing PMI was revised downward by -0.1 to 49.6, marking the steepest pace of contraction in 5 months [5]