The dollar ticked slightly higher on Friday but remained on track for a weekly decline as expectations strengthened that the Federal Reserve will ease monetary policy. Markets price an 85% probability of a rate cut in December and foresee three additional reductions during 2026. The currency looks set to end the month broadly flat, balancing rising rate-cut expectations against easing tensions. US Treasury yields stabilized modestly, with the 10-year climbing above 4%, while the overall trend stays downward as investors position for a more dovish policy path. Upcoming PMI releases, core PCE data and Fed speeches could drive volatility in currencies and yields.
"The dollar ticked slightly higher on Friday but remained on track for a weekly decline, and could face pressure from increasingly firm expectations of the Federal Reserve easing its monetary policy. Markets continue to price an 85% probability of a rate cut in December and an additional three reductions over the course of 2026. Despite this week's softness, the dollar is set to close the month broadly flat, reflecting a balance between rising rate-cut expectations and decreasing tensions."
"US Treasury yields stabilized modestly after several sessions of declines, with the 10-year rate climbing back above the 4% threshold. Still, the broader trend remains downward, as investors continue to position for a more dovish policy path next year. Attention now turns to a critical data-heavy week for the US. The manufacturing and services PMIs could offer an important read on the state of economic activity. Any deterioration could reinforce expectations of a more accommodative Fed stance."
"Next Friday, the core PCE is expected to hold at 0.2%, and could be another key determinant of the monetary policy outlook. Additionally, speeches from Fed members may provide clearer guidance on how they are interpreting recent softness in labor-market and activity indicators. Collectively, these events could inject meaningful volatility into both currency markets and US yields."
Read at London Business News | Londonlovesbusiness.com
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