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Hello everyone, today XM Forex will bring you "[XM Group]: The U.S. dollar index fell back, waiting for the Federal Reserve's decision." Hope this helps you! The original content is as follows:
On December 8, in early trading in Asia, spot gold was trading around US$4,209 per ounce. The market is waiting for the Federal Reserve to cut interest rates this week. The current probability of a 25 basis point interest rate cut is 86.2%. At the same time, geopolitical uncertainty also supports gold prices; the U.S. Crude oil traded around $60.11 per barrel, with oil prices benefiting from demand expectations and geopolitical uncertainty. Trump's eldest son earlier suggested that U.S. President Trump may consider withdrawing from the Ukraine peace process as many close allies of Ukrainian President Zelenskiy continue to face corruption charges.
The U.S. dollar index fell 0.1% on Friday to 98.994, close to a five-week low. Market traders are generally paying attention to this week's Federal Reserve resolution and expect policymakers to decide to cut interest rates at this meeting.
The euro was roughly flat against the dollar at $1.16433, close to a three-week high hit last Thursday. Traders see a near 90% chance of a rate cut by the Fed at this week's meeting, and expect two more rate cuts next year, according to market pricing data.
Some strategists said that weak labor market data has further strengthened market expectations for an interest rate cut, but the 90% probability may still appear too high. At the same time, many major brokerages, including Morgan Stanley, have changed their forecasts and now expect the Federal Reserve to cut interest rates by 25 basis points in December. These institutions had expected interest rates to remain unchanged.
The strategists also pointed out that the U.S. dollar is still overvalued relative to major currencies, so the current weakening trend is reasonable. Data released on Friday showed that U.S. consumer sentiment improved in early December, but this had a limited effect on boosting the dollar.
The market is also paying attention to the possibility that White House economic adviser Hassett willThe prospect of Powell taking over as Fed chairman at the end of his term is expected to push for more interest rate cuts. Some analysts believe that market expectations for an interest rate cut this week and a possible more dovish Fed stance in the future will continue to put pressure on the dollar.
The yen rose 0.1% against the dollar to 155.295. The yen has recently been supported by expectations that the Bank of Japan may raise interest rates this month. There are reports that Bank of Japan officials are ready to raise interest rates in December without a major economic shock.
The pound was little changed against the dollar at $1.3329, close to a six-week high reached in the previous session.
The next two weeks will usher in policy decisions from multiple central banks. In addition to the Federal Reserve, the central banks of Australia, Canada and Switzerland will announce decisions this week. In the following week, the Bank of Japan, the European Central Bank, the Bank of England and the Riksbank will also issue resolutions one after another.
Final data released by the Japanese Cabinet Office on Monday showed that Japan’s economy contracted by 0.6% year-on-year in the third quarter (Q3) of 2025. This figure was lower than market expectations of -0.5% and the previous -0.4%.
Japan’s gross domestic product (GDP) fell at an annual rate of 2.3% in the third quarter, while the previous reading shrank by 1.8%, lower than the market consensus of -2.0%.
ECB policymaker Oli Rehn said in an interview with Italian financial magazine "Milan Finance" on Saturday, "Our latest forecast shows that future inflation will be slightly less than 2%."
US consumer confidence improved in December, with the University of Michigan overall index rising to 53.3 from 51.0, exceeding expectations of 52.0. The rise was mainly due to a sharp increase in the expectations index, which rose from 51.0 to 55.0. However, sentiment on current conditions fell slightly to 50.7 from 51.1.
A key development cn.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.comes from inflation expectations. Full-year inflation expectations fell for the fourth consecutive month, from 4.5% to 4.1%, the lowest level since January 2025 - but still up from 3.3% at the beginning of the year. Long-term inflation expectations were slightly lowered to 3.2% from 3.4%, unchanged from January's data.
U.S. personal income increased by 0.4% month-on-month, in line with expectations, and personal spending increased by 0.3%, slightly lower than the market consensus of 0.4%. This cn.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.combination suggests that consumer demand remains resilient but is gradually slowing.
Inflation readings were generally stable. Overall personal consumption expenditures rose 0.3% month-on-month and remained at 2.8% year-on-year, slightly higher than August's 2.7%, but fully in line with expectations.
Core PCE increased 0.2% sequentially, while the annual indicator fell to 2.8% from 2.9%, below expectations for no change. The decline in core PCE is a mild but reassuring signal for policymakers who want to keep lowering inflation.
Overall, the data strengthened expectations that the Federal Reserve will cut interest rates next week.Inflation fell slightly as consumption growth slowed.
The above content is all about "[XM Group]: The US dollar index fell back, waiting for the Federal Reserve's decision". It was carefully cn.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.com.xmxyly.compiled and edited by the XM foreign exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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