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Hello everyone, today XM Forex will bring you "[XM Forex Platform]: The Federal Reserve may "hawkishly cut interest rates," and the U.S. dollar index is under pressure and fluctuating." Hope this helps you! The original content is as follows:
In Asian trading on Tuesday, the U.S. dollar index hovered around 99. The U.S. dollar index rose 0.1% to 99.07 on Monday, as the market generally expected that the Federal Reserve would carry out a "hawkish interest rate cut" this week, which may simultaneously cut interest rates and release a signal that it will act cautiously in the future, providing support for the U.S. dollar. At the same time, the Japanese yen fell across the board due to a strong earthquake in Japan. Markets have all but priced in a rate cut from the Fed this week, but investors believe its policy statement and Chairman Jerome Powell's speech could signal a higher threshold for further cuts. This expectation brings support to the US dollar. Central banks in Australia, Canada, Switzerland and Brazil will also hold meetings this week, but are expected to keep interest rates unchanged. Among them, due to Australia's strong data, the market has begun to expect that it may raise interest rates next year.
U.S. dollar: As of press time, the U.S. dollar index is hovering around 99.08. The U.S. dollar index rose slightly on Monday, with traders trying to regain the key level of 99.169, the 50-day moving average. Holding this position will provide stability for the short-term momentum of the U.S. dollar during the key Fed meeting week. Dollar positions remain solid despite widespread expectations for a rate cut on Wednesday being priced in. Speculative traders have taken the largest long positions on the U.S. dollar since before the onslaught of Trump-era tariffs. Strong positioning provided support for the U.S. dollar index, as demand for the U.S. dollar continued even as the greenback fell slightly for three consecutive weeks. Currently, U.S. economic growth remains resilient, inflation remains above the 2% target, and the fiscal stimulus brought by the government's latest bill is expected to provide further support. These factors have reduced the urgency for the Federal Reserve to cut interest rates multiple times and are also expected to limit the downside of the U.S. dollar index. Technically, the U.S. Dollar Index is currently testing 5The 0-day moving average is 99.169. A full recovery of this level would ease near-term downward pressure, with the 200-day moving average at 99.476 acting as immediate resistance. The short-term support level is last week's low of 98.765. If it falls below this level, the subsequent target will be 98.565, and then test the 98.307-97.814 range. On the upside, the retracement range formed by the new fluctuation range (100.395-98.765) is 99.580-99.772.
US President Trump announced at the White House on the afternoon of the 8th that the federal government will provide US$12 billion in aid to American farmers to cope with the "backlash" of US tariff policies on US agriculture. The Trump administration introduced a wide range of tariff increases earlier this year, disrupting global trade.order, resulting in the U.S. export market being blocked. The low prices of agricultural products such as soybeans and corn in the United States, coupled with the rising costs of chemical fertilizers and agricultural machinery, have made it difficult for American farm operations to be profitable, and many farmers are in trouble.
Hassett, director of the White House National Economic Council, said on Monday that it would be "irresponsible" for the Federal Reserve to announce the interest rate path for the next six months in advance. He emphasized that monetary policy should be adjusted flexibly based on economic data. "The job of the Fed chairman is to keep an eye on the data, make adjustments when appropriate, and explain why certain actions are taken," Hassett said. "It would be irresponsible to say, 'I'm going to do this in the next six months.'" As the favorite to succeed current Chairman Powell, Hassett was asked how many more interest rate cuts he expected to need in 2026. He avoided specific predictions: "I don't want to disappoint everyone with speculation on the number of interest rate cuts, but I can say that the key is to look at the data." Hassett praised Powell for effectively coordinating opinions within the FOMC before this meeting: "I think he has done a good job of 'managing a room of cats' and successfully gathered consensus on interest rate cuts. I believe Powell agrees with me." point of view - we should probably continue to lower interest rates. ”
The European Central Bank on Monday urged Rome to reconsider a proposed amendment that said the Bank of Italy’s gold reserves belong to the Italian people. The ECB warned that the move could jeopardize the central bank's independence. In a document posted on its official website, the European Central Bank reiterated its opposition to the proposal. Italy has revised the amendment twice, and the latest draft clearly states that the measure will not override relevant EU rules to protect the independence of the central bank. Italy has the third largest gold reserves in the world, recorded on the central bank's balance sheet. The Bank of Italy is legally required to manage the gold in accordance with EU rules, which prohibit its use for government spending. Lawmakers from Italy’s ruling party proposed incorporating the amendment into the 2026 budget law. The original version stated that the central bank gold belonged to the state, but this was later revised to state that it belonged to the Italian people.
The Canadian Ministry of Finance said in a statement that Canadian Finance Minister Francois-Philippe Champagne hosted a video meeting of the Group of Seven (G7) finance ministers on Monday to discuss export controls and critical minerals issues. The Canadian Treasury said: "An important consensus is that all parties will express concerns about the application of non-market policies, including export controls, to critical mineral supply chains, on the grounds that this will cause serious negative macroeconomic consequences, increase price volatility, and worsen global growth prospects."
New York Fed released on MondayThe report showed that while U.S. households' expectations for future inflation trends remained stable, their views on current and future financial conditions became more pessimistic in November. The region's central bank noted in its survey that respondents' views on current financial conditions had "significantly worsened," while their outlook a year from now had "worsened slightly." However, respondents' views of the job market improved in November. Expectations for a rise in unemployment over the next year have weakened, while the likelihood of losing a job within the next year fell to the lowest level since December 2024, the report said. Households also lowered their probability of voluntarily leaving their jobs. In addition, the New York Fed report showed that inflation expectations in November were generally moderate. Inflation expectations for the next year remain at 3.2%, consistent with last month; inflation expectations for three and five years are both maintained at 3%. House price expectations for November also remain stable, with a rise of 3% expected, while outlooks for a range of xmyktj.cnmodity prices have changed little. But the one-year forecast for health care costs is up 10.1%, the highest level since January 2014. The report also noted that expectations for future income and wage growth remained positive in November xmyktj.cnpared with the previous month.
ING analysts said in a report that as the Bank of England may further cut interest rates and political risks in the UK remain worrying, the pound may weaken against the euro. Analysts say the Bank of England is likely to cut interest rates at its December 18 meeting and cut interest rates twice more next year, taking the policy rate to 3.25% from the current 4.0%. British assets remain exposed to "significant political risks" as Prime Minister Starmer and Chancellor Reeves remain under pressure following last month's budget to implement fiscal austerity. ING expects EUR/GBP to rise to 0.90 in 12 months, while citing the euro zone's fiscal stimulus and the ECB keeping interest rates on hold for two years.
Jeffrey analysts pointed out in their 2026 outlook report that the U.S. dollar’s dominance in global foreign exchange reserves may face gradual erosion, partly due to Trump’s tariff policy on trading partners. "The recent trade war has damaged the U.S. dollar's status as the major reserve currency," the report said. Although the U.S. dollar will retain its core reserve currency role in the short term, "a slow and sustained de-dollarization trend is likely to occur." Analysts warn that as geopolitical and trade frictions intensify, central banks and investors may begin to question the risks of concentrating all reserves in the dollar and seek diversification. "Investors may re-evaluate their over-reliance on the U.S. dollar and instead increase their holdings of other assets." Jefferies believes that gold will be the main beneficiary of this de-dollarization process.
Many investors expect that the Federal Reserve will release bias while cutting interest rates this week.Eagle's forward guidance reflects differences within the FOMC on whether to continue cutting interest rates. However, David Mericle, chief U.S. economist at Goldman Sachs, believes that the Fed is likely not to xmyktj.cnpletely rule out the possibility of taking action again in January next year. "It is unrealistic to expect the FOMC to paint itself into a corner by strongly suggesting that it will suspend interest rate cuts in January, because if the labor market is still significantly weakening by then, a rate cut may still be appropriate." He pointed out that since the release of employment data in September, the official has not released new labor market statistics, which makes the voting xmyktj.cnmittee even more reluctant to prematurely lock in the January policy path at this week's meeting. "In the absence of the latest employment data, policymakers will be extra cautious to avoid constraining their policy flexibility." Therefore, despite the possibility of a rate cut this week, the Fed may deliberately keep its rhetoric open to leave room for further easing in January based on economic data, especially labor market dynamics.
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