The dollar weakened against most major peers, slipping to a one week low as traders ramped up bets on a December cut. New Zealand’s dollar surged more than 1% after the RBNZ lowered rates but signaled its easing cycle is nearing an end. Gold advanced for a fourth day, trading near $4,166, supported by falling yields and renewed expectations of softer US policy. The British pound also gained ahead of UK Chancellor Rachel Reeves’ closely watched budget announcement.
Markets Reprice: From Hawkish Fear to Dovish Confidence
The rebound in global equities reflects a sharp turnaround from early November, when concerns about stretched valuations particularly in AI-linked names triggered a broad pullback. Now, delayed US data is painting a softer macro picture, offering traders fresh justification for a December rate cut.
A string of weaker indicators including the largest decline in US consumer confidence since April and modest gains in September retail sales reinforced views that demand is cooling. With the government shutdown creating major gaps in high frequency data, markets are “flying half blind,” elevating the importance of every release ahead of the December FOMC.
Fed funds futures now show traders almost fully pricing in a quarter point cut, a stunning reversal from earlier this month when the odds briefly sank below 30%. Yields reflect the shift too: the 10 year slipped below 4% for the first time in nearly a month.
Fed Governor Stephen Miran added fuel to the move, reiterating that the US economy “requires substantial rate reductions,” strengthening the perception that policy may loosen more aggressively in 2026. Markets are already looking ahead, with the dollar projected to remain under pressure into the new year as other major central banks hold steady.
The Hassett Factor: A Potentially More Dovish Fed
Hassett long aligned with Trump’s preference for lower rates is seen by traders as a catalyst for deeper cuts should he take over the Fed. His rising prospects weighed further on the dollar and boosted expectations for a prolonged easing cycle.
Global Highlights
- UK: Reeves’ budget is a critical risk event. She must reassure markets demanding a premium on UK debt while calming political pressure inside Westminster.
- RBNZ: Cut rates to a three-year low but delivered a hawkish-tilt outlook, boosting the NZD.
- South Korea: Finance officials signaled readiness to intervene as the won trades near a seven month low.
- Commodities: Oil steadied after hitting its lowest level in a month, pressured by encouraging signals on a potential Ukraine peace deal.
With rate expectations shifting rapidly, geopolitical risk in play, and data releases carrying outsized influence, traders should treat today’s developments as essential context before taking positions. The December FOMC narrative is no longer just about one meeting it is becoming the setup for 2026.
Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.