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The dollar index (DXY) is up by +0.06% today, supported by weakness in the yen amid its struggle to remain above last Friday’s 10-month low. Fed Governor Christopher Waller advocates for a December rate cut, contributing to limited gains in the dollar. The markets currently price in a 70% probability of a 25 basis point cut during the Federal Open Market Committee (FOMC) meeting on December 9-10.
In Europe, the euro (EUR/USD) is up by +0.08% after NATO Secretary General Rutte indicated potential for a peace deal to end the war in Ukraine. However, this is offset by a decline in German Nov IFO business confidence, which fell to 88.1, lower than the expected 88.5. Swaps indicate a 2% chance of a rate cut by the ECB at their meeting on December 18.
The yen (USD/JPY) is under pressure, trading above a 10-month low, following Japan’s $112 billion stimulus package approved last Friday. Today, the market anticipates a 23% chance of a Bank of Japan rate hike at their meeting on December 19. Precious metals, including gold (up +0.21%) and silver (up +0.19%), have seen increased demand as a store of value following Waller’s comments amidst geopolitical uncertainties.
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