Asian session review: the US dollar is showing negative dynamics

During today's Asian trading, the US dollar rose significantly against major currencies, rebounding from its lowest level since November 12, reached on Friday. The rally of the US currency was triggered by statements by Donald Trump, who warned BRICS emerging nations against trying to replace the greenback with any other currency. Market participants also continued to overestimate the outlook for the Fed's monetary policy, as recent stronger-than-expected economic data increased the likelihood that the Fed would slow down the pace of interest rate cuts as it approached a neutral level. According to the CME FedWatch Tool, markets see a 67.1% probability of a 0.25% rate cut in December (compared to 52.3% a week ago), while the probability of an additional rate cut in January is only 15.8%. But U.S. labor market data (to be released on Friday) and speeches by Fed policymakers, including Fed Chairman Jerome Powell (on Wednesday), may cause a revision of these expectations.

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) rose by 0.55% to 106.32. Last week, the index fell by 1.68%, but has gained 1.7% since the beginning of November.

The euro fell 0.7% against the US dollar amid increasing political uncertainty in France. France's far-right National Rally (RN) party will likely back a no-confidence motion against the government in the coming days unless there is a "last minute miracle", RN president Jordan Bardella said. As for the impact on the foreign exchange market, experts said that if the Barnier government falls, broader downward pressure on the euro would quickly re-assert itself, including against the swiss franc.