US Dollar Index Holds Near 1-Month Low

2025-12-05 16:02 By Andre Joaquim 1 min. read

The dollar index held below 99 on Friday, a one-month low, as the prospect of more rate cuts by the Federal Reserve contrasted with those from other central banks.

Rate futures maintained the consensus of a 25bps cut by the Fed in its December meeting, bolstered after a series of pessimistic labor market data and dovish comments from FOMC Governor Waller and New York Fed President Williams.

Data from the ADP unexpectedly pointed to a reduction in private payrolls during November, while outstanding unemployment claims held near four-year highs.

In the meantime, the University of Michigan consumer confidence survey reflected strong pessimism for labor expectations, despite the slight improvement, while the lack of upside surprises for September's PCE price index favored the argument for dovish FOMC members.

Conversely, ECB policymakers showed some consensus that rates will remain stable in the meantime on inflation risks, while the BoJ signaled it will deliver a hike this month.



News Stream
Dollar Rally Pauses on Friday
The dollar index fell below 101 on Friday, pausing a five-session rally that had taken the greenback to July highs. A modest decline in oil prices, amid signs that US and Iranian negotiators may be exploring a phased agreement to reopen the Strait of Hormuz, provided some relief to investors concerned about inflationary pressures. Nevertheless, the dollar gained around 1% on the week, marking a second consecutive week of gains. The move was supported by expectations of further monetary policy tightening by the Fed, continued uncertainty in the Middle East, the sequential rise in oil prices, and resilient US economic activity. The greenback was mostly lower against the yen on Friday after Japanese authorities said Tokyo and Washington remain committed to the stance underpinning July’s joint interventions. Finance Minister Katayama also said that President Trump had expressed concerns about the yen during a meeting with Prime Minister Sanae Takaichi earlier this week.
2026-09-25
Dollar Set for Second Weekly Gain
The dollar index held above 101 on Friday after rising for four straight sessions, trading at its strongest levels in nearly two months and on track to advance for the second consecutive week. The greenback strengthened as elevated oil prices and robust US economic data stoked inflation concerns, reinforcing expectations that the Fed may tighten policy further. Markets are currently pricing in roughly a 67% probability of a Fed rate hike in October, following last week's increase. New York Fed's John Williams said the central bank still has a lot of work to do to bring inflation under control, while Philadelphia Fed's Anna Paulson said some modest additional policy tightening could be warranted. On the data front, US weekly initial jobless claims unexpectedly fell by 1,000 to a two-month low of 197,000, pointing to continued labor-market resilience. Investors now await consumer sentiment and durable goods data on Friday for further clues about the economy.
2026-09-25
Dollar Strengthens Further
The dollar index extended its gains for a fourth consecutive session, rising to 101.2 on Thursday, its longest winning streak since May and keeping it near July highs. The dollar has been supported by expectations of further Fed tightening. Oil prices also moved higher amid elevated tensions between the US and Iran, while talks on the sidelines of the UN General Assembly have made little progress toward ending the conflict. Higher energy prices are likely to add further pressure on inflation, particularly as US diesel prices hit a new record high. Against this backdrop, traders have increased their bets on further Fed tightening this year. Markets are now pricing in nearly a 64% chance of another 25 bps rate hike in October. Recent comments from several Fed officials have also been perceived as hawkish. Meanwhile, the dollar strengthened against the Swiss franc after the Swiss National Bank left interest rates unchanged at 0%. The Japanese yen also weakened to three-week lows.
2026-09-24