Dollar Gains Strength Amidst Political Turmoil

2 Dec 2024 , 09:51 AM

In what is expected to be a pivotal week for the possibility of U.S. rate cuts, the dollar edged upward on Monday, while bets on domestic rate hikes supported the yen’s recent recovery.

Additionally, U.S. President-elect Donald Trump verbally backed the dollar on Saturday, calling on BRICS nations to pledge not to invent a new currency or support one that could displace the dollar or face 100% tariffs.

After rebounding 1.5% last week and escaping a one-year low of $1.0425, the euro fell 0.4% to $1.0532 due to political unpredictability in France.

The November payrolls data, which is due on Friday, will be crucial to the outlook for rates. Based on the weather and strike-hit report from October, median projections suggest a 195,000 increase, though this could be changed given the survey’s low response rate.

The unemployment rate is predicted to increase from 4.1% to 4.2%, which should maintain the Fed’s plan to make a 25 basis point cut on December 18.

Although only two additional cuts are factored in for the entire year 2025, markets indicate a 65% possibility of such an easing.

In addition to manufacturing and services surveys, a number of Fed officials, including Fed Chair Jerome Powell, are scheduled to speak this week.

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