The dollar index (DXY) increased by 0.17% today, fueled by declines in GBP/USD following weaker-than-expected UK consumer prices and a drop in the yen due to Japanese fiscal concerns. Fed Governor Christopher Waller noted that U.S. interest rates remain 50-100 basis points above neutral, allowing for potential rate cuts without urgency, while the market anticipates a 24% chance of a 25 basis point cut at the January FOMC meeting.
In the Eurozone, November consumer price index (CPI) was revised down to 2.1% year-over-year from 2.2%, and Q3 labor costs saw the smallest increase in three years at 3.3%. In Germany, the IFO business conditions survey unexpectedly fell to 87.6, a seven-month low. The euro is under pressure as the European Central Bank is not expected to cut rates further.
Japan’s yen weakened by 0.48% amid concerns over a potential record budget exceeding 120 trillion yen. Despite this, Japan’s November exports rose by 6.1%, surpassing expectations, and core machine orders unexpectedly surged by 7.0%. The market assigns a 96% chance of a Bank of Japan rate hike in their upcoming meeting. Precious metals rose as safe-haven assets, with silver hitting a record high of $65.28 per troy ounce amid geopolitical tensions and increasing central bank gold purchases.
