Asian session review: the US dollar has stabilized against major currencies

During today's Asian trading, the US dollar consolidated against major currencies, while uncertainty remained in the market regarding Donald Trump's proposed policy.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.05% to 106.63.

The dollar rose by more than 2% after the US presidential election on November 5 amid fears that Trump's policies could reignite inflation and force the Fed to reconsider plans to lower rates in the future. At the same time, traders are assessing what Trump's campaign promises on tariffs mean for the rest of the world, with Europe and China likely to be Trump's main targets. Regarding the outlook for the Fed's monetary policy, most economists expect the Fed to cut rates at its December meeting, with a smaller reduction in 2025 than expected a month ago due to the risk of higher inflation due to Trump's policies. Currently, market participants estimate a rate cut of only 77 basis points by late 2025, compared with more than 100 a few weeks ago. According to the CME FedWatch Tool, markets see a 55.5% probability of a 0.25% rate cut in December (compared to 58.9% yesterday).

The yen rose 0.45% against the US dollar, as the head of the Bank of Japan, Kazuo Ueda, said that the central bank would "seriously" take into account changes in exchange rates when making its economic and price forecasts. He noted that there is still a month left before the next meeting of the Bank of Japan in December, adding that by then there will be more information that will need to be digested. Overall, market pricing is nearly even split on a December hike amid the yen's recent decline back towards the 38-year-lows touched in July.