Dollar Steady Despite Anticipated Rate Cut

18 Dec 2024 , 09:07 AM

As investors awaited the Federal Reserve’s potential hawkish cut ahead of this week’s meeting of the Bank of Japan and other central banks, the U.S. dollar remained stable against the yen and other key competitors on Wednesday.

The focus will be on how much more the Fed officials believe they will lower rates in 2025, according to the fresh economic estimates for the coming year that were revealed with the decision.

According to the CME’s FedWatch tool, markets are pricing in a 97% chance that the Fed will decrease interest rates by 25 basis points at the conclusion of its two-day policy meeting on Wednesday.

Tuesday’s data revealed a strong U.S. economy after retail sales in November exceeded forecasts by increasing by 0.7%, driven by a rise in online and auto sales.

Investors are also considering how the Fed’s outlook might be affected by the tariffs and tax cuts that the incoming Trump administration has promised.

The U.S. dollar index, which compares the dollar to six competitors, saw minimal movement on Monday, falling 0.04% to 106.89 after reaching its highest level since November 26 at 107.18.

The dollar had lost some of its recent gains against the yen in the previous session as U.S. Treasury yields fell ahead of the Fed’s announcement, but it was still up 0.12% at 153.65.

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