Weekly Analysis

The dollar index dropped 0.8% last week, breaking a six-week winning streak. Despite strong US data, hopes for Fed rate cuts rose due to weaker inflation, PPI, and retail sales. The euro gained as European inflation aligned with forecasts, Germany’s data exceeded expectations, and ECB hawkishness supported the currency.

The US Dollar Index ended the week higher, bolstered by hawkish FOMC minutes and inflation data. Despite positive PMI data and inflation figures supporting a less aggressive ECB stance, the euro weakened against the stronger dollar. The pound also fell, pressured by rising yields and capital outflows linked to inflation and fiscal instability.

The dollar index rose to 109.4, its highest since October 2022, driven by strong U.S. growth expectations, elevated rates, and Trump’s pro-growth policies. The euro fell to $1.0220, weakened by Europe’s weak outlook and a dovish ECB, while the pound dropped on UK economic stagnation and BoE rate cut signals.

The Dollar Index rose slightly as 2025 rate cut expectations dropped to 35 basis points. EUR/USD fell on Lagarde's dovish remarks, while GBP/USD declined due to BoE rate cut votes and weak Q3 GDP. The yen weakened as mixed data and BoJ caution on rate hikes outweighed higher Tokyo inflation.

The dollar index hit a two-year high of 108.5 on hawkish Fed signals but eased after core PCE prices rose just 0.1% in November, sparking hopes for disinflation.

The dollar index rose above 107, gaining 1% for the week, as markets priced in a 25-basis point Fed rate cut, with 2025 remaining uncertain.

The U.S. Dollar Index ended flat this week as employment data met expectations, manufacturing PMI exceeded forecasts, and Powell’s cautious remarks on rate cuts raised the probability of a December 25bps cut to 72%. 

This week, markets reacted to economic data and policy shifts, with the Dollar Index ending a nine-week rally. Major currencies gained against the dollar, driven by inflation dynamics and central bank signals. Commodities like gold and silver declined on easing geopolitical risks, while U.S. Treasury yields and equities saw mixed performances amid nuanced economic trends.