The dollar index (DXY00) is down -0.30%, falling back from last Friday's 1-week high.  The dollar continues to see underlying weakness as the FOMC is expected to cut interest rates by about -50 bp in 2026, while the BOJ is expected to raise rates by another +25 bp in 2026, and the ECB is expected to leave rates unchanged in 2026. The dollar is also under pressure as the Fed boosts liquidity in the financial system, having begun purchasing $40 billion a month in T-bills in mid-December.  The dollar is als ...

The dollar index (DXY00) on Tuesday rose by +0.11%.  The dollar moved higher on Tuesday amid short covering ahead of the 2-day FOMC meeting, which ends on Wednesday.  The dollar gained ground on Tuesday after the Oct JOLTS job openings unexpectedly rose to a 5-month high, a hawkish factor for Fed policy.  The dollar's near-term upside is limited amid expectations that the Fed will cut the federal funds target range by 25 bp at the conclusion of the Tue/Wed FOMC meeting. President Trump said last that he w ...

The dollar index (DXY00) today is up slightly by +0.05%.  Higher T-note yields today are supportive of the dollar as the 10-year T-note yield rose to a 1.5-week high at 4.11%.  Also, today’s action by the OECD to boost its US 2025 GDP forecast was supportive for the dollar.  Strength in stocks today is limiting gains in the dollar as it reduces liquidity demand for the dollar. The dollar is being undercut by expectations for a rate cut at next week’s FOMC meeting, as the swaps market now discounts a 96% c ...

Group 1: Dollar Index and Federal Reserve - The dollar index fell to a 1.5-week low, finishing down by -0.08% due to increased expectations of a Fed rate cut at the upcoming FOMC meeting [1] - Swaps markets now indicate an 83% chance of a 25 basis point rate cut at the next FOMC meeting on December 9-10, up from 30% last week [3] Group 2: Potential Fed Chair Nomination - The dollar is under pressure following reports that Kevin Hassett is a leading candidate to succeed Jerome Powell as Fed Chair, which is viewed as bearish for the dollar due to Hassett's dovish stance [2] Group 3: Eurozone Economic Indicators - The euro rose by +0.05% as it recovered from early losses, supported by increased inflation expectations in the Eurozone and stronger-than-expected German CPI [4] - Eurozone's October 1-year inflation expectations increased to +2.8% from +2.7% in September, contrary to expectations of a decline [5] - German October retail sales unexpectedly fell by -0.3% month-over-month, which was weaker than the anticipated +0.2% increase [5] Group 4: Japanese Yen Performance - The yen rose by -0.12% amid better-than-expected Japanese industrial production and retail sales reports, with the November Tokyo CPI remaining above 2%, indicating a hawkish outlook for BOJ policy [6]

Group 1: Dollar Index and Federal Reserve - The dollar index (DXY) fell by -0.03% on Monday, influenced by dovish comments from Fed Governor Christopher Waller advocating for a December rate cut [1] - Waller's comments increased the probability of a Fed rate cut next month to 80% from 30% [1][3] - A stock rally on Monday reduced liquidity demand for the dollar, while weakness in the yen provided some support for the dollar [1] Group 2: Euro and Ukraine Conflict - The EUR/USD rose by +0.12% on Monday due to dollar weakness and improved prospects for peace in Ukraine, as NATO Secretary General Rutte expressed confidence in a peace deal [4] - The euro's gains were limited by an unexpected decline in the German November IFO business confidence, which fell -0.4 to 88.1, below expectations [4][5] Group 3: Japanese Yen and Economic Concerns - The USD/JPY rose by +0.26% on Monday, with the yen under pressure due to concerns about Japan's debt burden [6] - The Japanese government approved a 17.7 trillion-yen ($112 billion) stimulus package, exceeding last year's package, which contributed to the yen's weakness [6] - Trading activity in the yen was below normal due to the Japanese Labor Thanksgiving Day holiday [6] Group 4: Market Expectations for Rate Cuts - Markets are pricing in a 2% chance of a -25 basis point rate cut by the ECB at the December 18 policy meeting [5] - There is a 16% chance of a BOJ rate hike at the next policy meeting on December 19 [7]

Core Insights - The dollar index rose by +0.65%, reaching a 2-week high, driven by the cancellation of the October employment report and hawkish FOMC meeting minutes [1][4] - The yen weakened significantly, hitting a 9.75-month low, due to concerns over increased Japanese government debt from a proposed stimulus package [2][7] - The US trade deficit narrowed more than expected, further supporting the dollar [2][3] Dollar Performance - The dollar's strength was bolstered by the cancellation of key employment data, reducing the likelihood of a Fed rate cut [1] - The hawkish tone of the FOMC minutes indicated that many officials prefer to keep interest rates steady for the remainder of the year [4] Yen and Japanese Economic Concerns - The yen's decline was exacerbated by dovish comments from a BOJ advisor, suggesting no interest rate hikes before March [7] - A supplementary budget of approximately 20 trillion yen ($129 billion) is anticipated to stimulate domestic demand, raising concerns about Japan's debt burden [7] Trade Deficit Impact - The US trade deficit shrank to -$59.6 billion in August from -$78.2 billion in July, which was narrower than the expected -$60.4 billion [3]

Group 1: Currency Movements - The dollar index (DXY) increased by +0.39%, reaching a 1.5-week high, driven by weakness in the yen and a narrowing US trade deficit [1][3] - The yen fell to a 9.75-month low against the dollar due to dovish comments from a Japanese government advisor and concerns over Japan's increasing debt burden [6][1] - The euro declined by -0.23% to a 1-week low, influenced by the dollar's strength and central bank divergence, with the ECB expected to halt rate cuts while the Fed may continue to cut rates [4][5] Group 2: Economic Indicators - The US trade deficit for August narrowed to -$59.6 billion from -$78.2 billion in July, better than the expected -$60.4 billion [3] - US MBA mortgage applications decreased by -5.2% in the week ending November 14, with the average 30-year fixed mortgage rate rising to 6.37% [2] - Japanese core machine orders saw their largest increase in six months, and the 10-year Japanese government bond yield reached a 17-year high of 1.781% [7]

The dollar index (DXY00) on Tuesday fell by -0.05%.  The dollar was under pressure on Tuesday as signs of weakness in the US labor market have bolstered the outlook for the Fed to keep cutting interest rates after ADP reported employers cut jobs this month. Losses in the dollar were limited by Tuesday's news that the Nov NAHB housing market index unexpectedly rose to a 7-month high.  Also, Tuesday's slide in stocks boosted some liquidity demand for the dollar. US weekly initial unemployment claims were 23 ...

Economic Indicators - The dollar index (DXY00) is down by -0.13% due to signs of weakness in the US labor market, which have increased expectations for the Fed to continue cutting interest rates after ADP reported job cuts this month [1] - US weekly initial unemployment claims were reported at 232,000 for the week ending October 18, with continuing claims rising by +10,000 to a two-month high of 1.957 million [2] - ADP reported that US employers shed an average of 2,500 jobs per week in the four weeks ending November 1 [3] Housing Market - The November NAHB housing market index unexpectedly rose by +1 to a seven-month high of 38, surpassing expectations of no change at 37 [3] Currency Movements - EUR/USD recovered from overnight losses, up by +0.09%, as weakness in the US labor market benefits the euro, with the ECB seen as largely finished with its rate-cut cycle [4] - USD/JPY is down by -0.10%, with the yen recovering from a 9.5-month low against the dollar, supported by falling T-note yields and safe-haven demand due to a -3% slump in the Nikkei Stock index [6] - The yen initially moved lower due to dovish comments from BOJ Governor Ueda regarding gradual adjustments to monetary easing [7] Market Expectations - Markets are pricing in a 49% chance that the FOMC will cut the fed funds target range by 25 basis points at the next meeting on December 9-10 [3] - Swaps are pricing in a 4% chance of a -25 basis point rate cut by the ECB at the December 18 policy meeting [5]

Group 1: Dollar Index and Economic Indicators - The dollar index (DXY00) increased by +0.25% due to the unexpected rise in the Nov Empire manufacturing general business conditions survey, reaching a 1-year high [1][2] - The Nov Empire manufacturing survey rose by +8.0 to a level of 18.7, significantly stronger than the expected decline to 5.8 [2] - The probability of a Fed rate cut at the upcoming FOMC meeting decreased to 41% from 70% earlier in the month, influenced by comments from Fed presidents favoring steady interest rates [1][3] Group 2: Euro and ECB Insights - The EUR/USD pair declined by -0.30% as the euro faced pressure from a stronger dollar and comments from ECB Vice President Luis de Guindos regarding elevated financial stability risks in the Eurozone [4][6] - The European Commission raised its 2025 Eurozone GDP forecast to +1.3% from +0.9%, while maintaining the inflation forecast at +2.1% [5] - The ECB is perceived to be nearing the end of its rate-cut cycle, contrasting with the Fed's expected rate cuts through the end of 2026 [5] Group 3: Japanese Economy and Yen Performance - The USD/JPY pair increased by +0.21% as the yen was pressured by news of a significant contraction in the Japanese economy in Q3, prompting discussions for an ambitious stimulus package [7] - An upward revision to Japan's September industrial production provided some support for the yen [7] - The yield on the 10-year Japanese government bond rose to a 17-year high of 1.737%, which is supportive for the yen [7]