The US Dollar weakened, with the dollar index falling for the fourth consecutive session to a near two-week low. This decline is largely attributed to increased market expectations of further Federal Reserve rate cuts, fueled by speculation surrounding the next Fed chair appointment. Despite positive economic data, such as lower jobless claims and stronger durable goods orders, the dollar depreciated against most major currencies, with the New Zealand and Australian dollars seeing the largest gains. Trading volume is anticipated to remain light due to the Thanksgiving holiday.
- The dollar index fell below 99.5, marking its lowest level in almost two weeks.
- Market expectations for a 25 basis point Fed rate cut in December have risen to approximately 85%.
- Three additional rate cuts are being priced in by the end of 2026.
- Kevin Hassett is considered the leading candidate for the next Fed chair, viewed as favorable to lower rates.
- Initial jobless claims unexpectedly declined, and durable goods orders exceeded forecasts.
- The dollar weakened against most major currencies, with the largest declines versus the New Zealand and Australian dollar.
- Trading volume is expected to stay light through Friday due to the Thanksgiving holiday.
The currency is facing downward pressure as investors anticipate a more dovish monetary policy. This expectation of lower interest rates makes the currency less attractive to investors seeking higher yields, contributing to its depreciation against other currencies. While positive economic indicators offer some support, the dominant influence appears to be the market’s perception of future monetary policy easing.