1553 GMT – The U.S. dollar is headed for its longest losing streak in years. The WSJ Dollar Index has fallen for seven consecutive trading days, on course for its most prolonged slide since July 2020 if the move holds through this afternoon, according to Dow Jones Market Data. The index dropped roughly 0.3% in Wednesday morning trading. Traders may be trimming dollar exposure as it looks increasing likely that President Trump will select Kevin Hassett as the next chair of the Federal Reserve, wrote David Morrison, senior market analyst at Trade Nation, in a morning note.”Mr. Hassett has made it clear that he favors lower interest rates.” On top of that, the likelihood of a rate cut at the Fed’s Dec. 10 meeting has risen over the last few weeks, according to interest-rate futures prices tracked by CME FedWatch. Investors now believe a cut is highly likely. Lower rates generally decrease the value of a country’s currency. (HannahErin.Lang@wsj.com)
Sterling Could Underperform if BOE Cuts Rates More Than Expected
1613 GMT – Sterling could underperform other G-10 currencies in 2026 as the Bank of England could cut interest rates more than expected, Standard Chartered strategists say in a note. The BOE could cut rates to a low of 3.0% from 4.0% currently, below market pricing of 3.4%, to offset potentially weaker growth stemming from tighter fiscal tightening, they say. “The growing possibility of leadership challenges to the ruling government is also sterling-negative.” The market has doubts on the government’s ability to craft a coherent fiscal-tightening plan despite a sizeable majority in parliament, they say. StanChart sees a risk the euro rises above its end-2026 forecast of 0.88 pounds, from 0.8757 currently, despite betting the European Central Bank will cut rates further. (renae.dyer@wsj.com)
Dollar Could Fall Further But at More Modest Pace
1426 GMT – The dollar could fall further in the first half of 2026 but declines should be more modest compared to this year, J.P. Morgan strategist Meera Chandan says in the bank’s 2026 outlook report. The dollar’s potential weakness will be led by positive growth outside of the U.S., the U.S. twin deficits and the Federal Reserve cutting interest rates further in the near term, she says. However, the dollar’s fall will be limited due to potentially better-than-expected U.S. growth, she says. J.P. Morgan expects the euro to rise to $1.20 by mid-2026 from $1.1666 currently.(renae.dyer@wsj.com)
Japanese Yen Could Fall in 2026 as Structural Issues Persist
1414 GMT – The Japanese yen could weaken next year, J.P. Morgan strategist Meera Chandan says in the bank’s 2026 outlook report. Japanese real yields—or yields adjusted for inflation—remain negative while new Prime Minister Sanae Takaichi is increasing fiscal stimulus, pushing up debt. A low yield and “tenuous fiscal situation” bode poorly given the prospect of resilient global growth next year boosting demand for carry trades. Carry trades involve investors borrowing in low-yielding currencies to invest in higher-yielding assets elsewhere. J.P. Morgan expects the dollar to rise to 158 yen in the second quarter of 2026 and 164 by the fourth quarter. It last trades at 155.47 yen. (renae.dyer@wsj.com)
Dollar Briefly Extends Losses After Weak Private Payrolls Data
1340 GMT – The dollar briefly extends losses, hitting a fresh five-week low against a basket of currencies, after ADP private payrolls data showed an unexpected decline in employment. Payrolls fell 32,000 in November. Economists in a WSJ survey expected a 40,000 rise. The data are closely monitored given the lack of official jobs figures after the recent U.S. government shutdown. The dollar had been falling ahead of the data after President Trump hinted that he would nominate Kevin Hassett, who is expected to favor rate cuts, as the next Federal Reserve Chair. The Fed is widely expected to cut rates on Dec. 10. The DXY dollar index initially falls to 98.885 after the data, from 98.933 beforehand. It last trades at 98.961.(renae.dyer@wsj.com)
Japanese Yen Could Fall in 2026 as Structural Issues Persist
1414 GMT – The Japanese yen could weaken next year, J.P. Morgan strategist Meera Chandan says in the bank’s 2026 outlook report. Japanese real yields—or yields adjusted for inflation—remain negative while new Prime Minister Sanae Takaichi is increasing fiscal stimulus, pushing up debt. A low yield and “tenuous fiscal situation” bode poorly given the prospect of resilient global growth next year boosting demand for carry trades. Carry trades involve investors borrowing in low-yielding currencies to invest in higher-yielding assets elsewhere. J.P. Morgan expects the dollar to rise to 158 yen in the second quarter of 2026 and 164 by the fourth quarter. It last trades at 155.47 yen. (renae.dyer@wsj.com)
Sterling Could Fall if U.K. Treasury Chief Reeves Is Pressured to Resign
1234 GMT – Sterling is at risk of falling in coming weeks if there are indications U.K. Treasury chief Rachel Reeves could lose her job after last week’s budget, Ebury strategist Matthew Ryan says in a note. The fallout from the budget is yet to have a meaningful impact on sterling, with Reeves being accused of misleading the public and the Office for Budget Responsibility Chair Richard Hughes resigning after forecasts were mistakenly released earlier than planned, he says. However, sterling still has scope to fall if Reeves is pressured to resign, he says. Sterling rises 0.6% to a one-month high of $1.3300 as the dollar weakens, LSEG data show. The euro falls 0.3% to 0.8771 pounds. (renae.dyer@wsj.com)
Dollar Extends Losses as Rate-Cut Bets Firm
1206 GMT – The dollar extends its losses to reach a one-month low against a basket of currencies as U.S. interest rate cut expectations strengthen after President Trump hinted he could nominate Kevin Hassett as the next Federal Reserve Chair. Hassett’s views are seen as most closely aligned with those of Trump, who has repeatedly called for rate cuts, ING analyst Chris Turner says in a note. The market’s response to the news is a weaker dollar, a faster fall of short-end yields than long-end yields and a rally in risky assets. This could be the dominant theme until the Fed’s Dec. 10 decision, Turner says. The DXY dollar index falls to a low of 98.968. (renae.dyer@wsj.com)
Dollar Weakens on Fed Rate-Cut Prospects
1051 GMT – U.S. Treasury yields mostly edge lower as expectations for Federal Reserve rate cuts grow and the dollar also falls. “A [rate] cut would narrow yield differentials with other major economies and weaken the dollar’s appeal for carry trades,” says Kudotrade’s Konstantinos Chrysikos in a note. Markets are also bracing for Wednesday’s ADP employment and ISM services PMI data, with consensus pointing to a cooldown in hiring and activity that could further reinforce rate-cut expectations, he says. The two-year Treasury yield falls 1.6 basis points to 3.499% while the 10-year yield is down 0.7 basis points at 4.081%. The 30-year yield, however, edges up 0.5 basis points to 4.746%, according to Tradeweb. The DXY dollar index falls 0.4% to 99.012. (emese.bartha@wsj.com)
Softer Energy Prices, Lower Dollar Hedging Costs Lift Euro
0856 GMT – Lower energy prices are a key driver of the euro’s gains, ING analyst Chris Turner says in a note. “Softer energy prices are sending the eurozone’s terms of trade to the highest levels of the year and supporting the eurozone’s external accounts,” he says. Another major driver is that hedging costs have fallen for eurozone residents wanting to take protection against losses on U.S. assets stemming from the risk of a weaker dollar, he says. News that Kevin Hassett could be the next pick for the Federal Reserve Chair also provides some support to the euro versus the dollar as he’s expected to deliver interest-rate cuts. The euro rises 0.2% to $1.1640. (renae.dyer@wsj.com)
Swiss Franc’s Strength Could Persist
0936 GMT – The Swiss franc should remain strong next year if the Swiss National Bank is reluctant to use foreign-exchange interventions or cut interest rates into negative territory, Rabobank’s Jane Foley says in a note. SNB Chair Martin Schlegel said the SNB is willing to be active in the forex market at the last meeting but made no reference to the franc’s high value. There’s also little expectations for rates to be cut again. The franc should also continue to benefit from its safe-haven status, she says. Rabobank lowers its three-month euro-franc forecast to 0.9200 from 0.9300. The euro trades flat at 0.9335 francs, showing little reaction even after data showed Swiss inflation unexpectedly fell to 0% in November. (renae.dyer@wsj.com)
Dollar Falls on Fed Chair News, Caution Ahead of Jobs Data
0745 GMT – The dollar falls after President Trump touted Kevin Hassett as a potential candidate for the next Federal Reserve Chair and as investors turn cautious ahead of U.S. jobs data. Trump said he would announce his pick for Fed Chair early next year and was considering Hassett, who is expected to favor lower interest rates. Meanwhile, the ADP private payrolls report is due at 1315 GMT. It takes on more importance than usual as no more official jobs data are due until after the Fed’s December 10 decision due to the recent government shutdown. The market is currently pricing in an 84% chance of a rate cut this month, LSEG data show. The DXY dollar index falls 0.3% to 99.113. (renae.dyer@wsj.com)
