2025.12.1614:11:15UTC+00Dollar Declines to Over 2-Month Lows

On Tuesday, the dollar index dropped below the 98.1 mark, reaching its lowest point in over two months. This decline came as traders continued to anticipate that the Federal Reserve might lower the federal funds rate again in the upcoming year. Recently released economic data did little to alter investors' expectations for up to two additional rate reductions by 2026. The employment report indicated that the U.S. economy gained 64,000 jobs in November, surpassing the 50,000 jobs forecasted. However, the unemployment rate unexpectedly rose to 4.6%, the highest since 2021, hinting at a potential slowdown in the labor market. Meanwhile, retail sales were flat overall, impacted by declines in auto dealerships and gasoline stations, although spending remained strong in several other sectors. The dollar showed notable weakness against the British pound and the Japanese yen, with a slight decline against the euro as well. The European Central Bank is expected to maintain its interest rates this week, while the Bank of England is widely anticipated to cut borrowing costs by 25 basis points. Additionally, the Bank of Japan is poised to raise interest rates.