The U.S. Dollar is trading in favorable ranges as markets get ready for the Holidays and low liquidity following rounds of central bank action.
The week may actually end in a surprising improvement of half a percent for the Buck after naturally losing ground as a result of the Federal Reserve’s interest-rate reduction and “dovish” take on the current state of the economy.
Although we have economic data saying that inflation has calmed down a bit, analysts and traders are doubting the statistics and inflationary reality. Questions surrounding the latest payrolls are also creating headlines about incomplete data points. As there is a lack of consensus about everything, the Buck is also rising again as a safe-haven asset in the midst of so many doubts going into 2026. Later at 10AM, we will get December’s reading of the University of Michigan Consumer Sentiment Survey. The expectation is of slightly more optimism than the month prior, which could aid Dollar value further.
What to Watch This Week…
- University of Michigan Consumer Sentiment 10AM
- Monex USA Online is always open
JPY ⇓
The Japanese Yen is down, trading at its weakest level since mid-November, and not too far away from the weakest point against the Buck since January. Counter to all expectations, the Yen has plummeted in value after the Bank of Japan increased interest rates, causing the highest borrowing costs in about 30 years. When it comes to the details, questions to BOJ Governor Kazuo Ueda about the neutral rate range and future rate hike path did not materialize in very “hawkish” nor clear answers. We shall see if FX intervention will be necessary.
EUR ⇑
The Euro had lost ground overnight, but things have flipped at the time of writing to a slightly positive move for the shared currency. Ever since December began, the Euro has improved by over 1.1% as investors and traders digest the latest take from European Central Bank members. The ECB chose to keep borrowing costs unchanged, but economist Isabel Schnabel commented that the ECB is not tilting towards a more “hawkish” policy that would signify telegraphing interest-rate hikes for the upcoming year. Schnabel and other members said that things are currently progressing in the financial environment steadily as desired and there may not be need for intervention unless data demands it.
