Ella 
The U.S. dollar (USD) extended losses in a holiday-shortened week, with EUR/USD gaining. The U.S. Dollar Index (DXY), which tracks the U.S. dollar against six major currencies, extended its pullback below 106.00 on Friday. The U.S. dollar index began to pull back on Monday after U.S. President-elect Donald Trump nominated veteran hedge fund manager Scott Bessant as Treasury Secretary.
Financial markets expect Bessant to implement Trump’s economic agenda without undermining foreign relations and fiscal discipline. Bessant told the Financial Times over the weekend: “The goal of implementing the tariffs will be ‘to be implemented gradually and to reduce the budget deficit to 3% of gross domestic product (GDP) through spending cuts. This move will not lead to Inflation is higher than expected’.
On the monetary policy front, market experts expect the Federal Reserve (Fed) to be cautious about cutting interest rates as data on the Fed’s preferred inflation gauge, the core personal consumption expenditures price index (PCE), accelerated in October. There is a 66% chance that the Fed will cut interest rates by 25 basis points to a range of 4.25%-4.50% at its December meeting, with the remainder supporting keeping rates on hold, according to CME Group’s FedWatch tool.
On Friday, the U.S. dollar is expected to remain sideways as U.S. markets have limited opening hours due to the Thanksgiving holiday. Investors should prepare for high volatility in the week ahead as a slew of employment and economic data is due to be released.
