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2025-12-16 19:05:32
[Dollar Weakening: Market Focuses on US Data to Judge Rate Cut Path] ⑴ Since the Federal Open Market Committee (FOMC) decision last week, the US dollar has continued to weaken against major currencies. The Fed cut rates by 25 basis points as expected and set a higher threshold for further rate cuts, but Fed Chairman Powell's press conference remarks were considered quite dovish. ⑵ In fact, he did not try to remain neutral and emphasize data dependence, but instead downplayed inflation risks and highlighted the weakness in the labor market, suggesting that he tolerates higher inflation more than a weaker labor market. ⑶ Market focus has now shifted to the US non-farm payrolls report and the Consumer Price Index (CPI) report. Current market pricing indicates that the Fed will cumulatively cut rates by 58 basis points by the end of 2026. ⑷ If US data is strong, especially regarding the labor market, the market may see a hawkish repricing, thus providing support for the dollar. On the other hand, weak data could further depress the dollar, as the market will bring forward its rate cut expectations.
