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2025-12-12 18:05:28
[Dollar Falls, Pound Trembles: A Major Turning Point for Global Currencies?] ⑴ The US dollar index stabilized around 98.34 on Friday, but is expected to fall for the third consecutive week, by about 0.64%, bringing its year-to-date decline to over 9%, potentially marking its largest annual drop since 2017. ⑵ The main reason for the dollar's weakness is market expectations of a Federal Reserve rate cut next year. Despite uncertainty surrounding the policy path, traders have already priced in two rate cuts in 2026, a divergence from the relatively cautious forecasts of Fed officials. ⑶ The pound held steady against the dollar around 1.3383, near a seven-week high. Although data showed the UK economy unexpectedly contracted by 0.1% in the August-October period, this actually strengthened market expectations of an imminent Bank of England rate cut. ⑷ The euro also performed strongly against the dollar, trading around 1.1737. European currencies are all on track for their third consecutive week of gains against the dollar. (5) The yen weakened slightly against the dollar to 155.87, with market focus shifting to next week's Bank of Japan meeting, where a rate hike is widely expected, and attention is focused on its guidance on the interest rate path until 2026. (6) The Swiss franc stabilized at 0.7951 against the dollar, after the Swiss National Bank kept interest rates unchanged on Thursday, noting that the recent agreement to reduce tariffs on US goods improved the economic outlook. (7) The sharp fluctuations in the currency markets reflect a divergence in the policy cycles of major central banks globally, moving away from synchronized tightening. Economic data and political factors (such as the US election year and Trump's tariff rhetoric) are exacerbating market volatility and uncertainty.
