A Bloomberg gauge for the dollar is headed for its worst week since June, and US Treasury bonds are rising as traders await data due early next month to confirm expectations of further Federal Reserve interest rate cuts in 2026.
With trading subdued due to the holiday this week and markets in the UK closed on Friday, investors' attention is largely focused on key US economic reports expected in the first few weeks of January. The December jobs report and consumer inflation figures, in particular, will help determine the Fed's next move after officials lowered borrowing costs this month for the third consecutive time to support growth.
The Bloomberg Dollar Spot Index fell slightly on Friday and is down about 0.8% this week. The index has fallen about 8% this year, which would be its steepest annual decline since 2017. It is also poised for its lowest close since September. Risk-sensitive currencies such as the Australian dollar and the Norwegian krone led gains against the US dollar this week among other major currencies.
"Liquidity has been thin this week, and that hasn't helped the dollar, which was already in a relatively weak position," said Andrew Hazlett, a foreign exchange trader at Monex Inc. "Looking ahead, our focus will be on inflation figures as a guide to the next Fed rate cut."
The dollar's decline coincided with a rise in US Treasury bonds, with the 10-year US Treasury yield falling about three basis points this week to 4.12%, within the range of the past few weeks. Traders see about a 90% chance that the Fed will keep rates unchanged next month. But they are betting on another quarter-point cut by mid-year, and another a few months later.
US unemployment data released this month showed the unemployment rate rose to its highest level since 2021, while consumer inflation data showed lower-than-expected figures.
Traders have raised expectations for US currency weakness for five consecutive days, with a key options indicator now at its most bearish level against the US dollar in more than three months. (alg)
Source: Bloomberg
The USD/CHF pair weakened for the third consecutive day and traded around 0.7960 in early European trading on Tuesday. The Swiss franc strengthened on increased demand for safe haven assets, following...
The US Dollar Index (DXY) trended sluggishly around 99.06 on Monday (January 19th), as liquidity thinned as US markets were closed for Martin Luther King Jr. Day. Despite limited movement, global sent...
The US dollar is expected to rise for a third straight day on Thursday (January 8), but trading remains cautious as investors position themselves ahead of Friday's Nonfarm Payrolls (NFP) report. Recen...
The dollar index edged up to 98.5 on Tuesday, its strongest level in more than two weeks, as investors focused on a slate of key economic data for the US. Recent indicators have pointed to some soften...
The US dollar opened 2026 weakly on Friday. Throughout last year, the dollar was pressured by many major currencies due to narrowing interest rate differentials between the US and other countries. Con...
Oil prices stabilized on Thursday (February 12th), as the market reassigned a risk premium to US-Iran tensions despite US inventory data showing swelling domestic supplies. This movement confirms one thing: geopolitical headlines are still more...
Gold prices weakened slightly on Thursday (February 12th), as more solid US employment data reduced market confidence in an imminent Federal Reserve interest rate cut. The strong employment data prompted market participants to shift expectations of...
The Hang Seng Index reversed its downward trend in Hong Kong on Thursday (February 12th), weakening by around 0.9% to around 27,000 after a strong session earlier. This decline halted the momentum of the short term rally, as investors began to...