The U.S. dollar headed for its worst weekly decline since late July on Friday, as investors increased their bets on a possible interest rate cut by the Federal Reserve in December, while the U.S. Thanksgiving holiday kept trading volumes light.
CME Group said trading on its widely used currency platform, as well as in stock and commodity futures, was halted due to a cooling-related outage at CyrusOne data centres. The exchange operator said the issue disrupted systems supporting its global markets.
“We are not expecting any significant impact on the market … we are going to have a fairly quiet end to the month and the week,” said Lee Hardman, senior currency analyst in MUFG’s global markets division for EMEA.
The dollar index rose 0.2% to 99.711 but remained on track for its largest weekly loss since July 21 after five straight sessions of declines.
Futures linked to the Fed funds rate showed traders pricing an 87% chance of a 25-basis-point rate cut at the central bank’s December 10 meeting, compared with 39% a week earlier, according to the CME FedWatch tool. Expectations have risen since New York Fed President John Williams said last week the central bank could lower rates “in the near term” without jeopardising its inflation target.
The comments “give us more confidence that they will cut rates … which has, at least temporarily, put a dampener on the dollar’s uptrend,” Hardman said.
In Asia, the Japanese yen steadied after recent weakness. It was last unchanged at 156.2 per dollar as labour market and inflation data strengthened the case for monetary tightening, amid persistent pressure on the currency that has fuelled speculation of possible intervention by the Ministry of Finance.
Consumer prices in Tokyo rose 2.8% in November, beating expectations and remaining above the Bank of Japan’s 2% target.
“The yen has kind of stabilised at weaker levels this week, it has reduced pressure on Japan to step in and support the currency,” Hardman said.
The euro eased 0.2% to $1.1568 after Ukraine’s President Volodymyr Zelenskiy said Ukrainian and U.S. delegations would meet this week to discuss a formula for ending the war with Russia and securing guarantees for Kyiv.
Sterling fell 0.3% to $1.3201 but was still on course for its strongest weekly gain since early August, following UK finance minister Rachel Reeves’s announcement of £26 billion ($34 billion) in tax rises. Reeves defended the government’s plans on Thursday, saying the increased tax burden — set to reach a post–World War II high — would help fund additional welfare spending.
