Dollar Edges Up in Thin Holiday Trade but Still Set for Biggest Weekly Drop in Four Months

The U.S. dollar strengthened slightly on Thursday in subdued trading due to the Thanksgiving holiday, though the currency remained on track for its steepest weekly decline in four months.

By 04:49 ET (09:49 GMT), the U.S. Dollar Index rose 0.1% to 99.69, with volumes muted as U.S. markets stayed closed for the holiday.

Fed Chair Speculation Adds Pressure

Sentiment around the dollar was shaped in part by reports suggesting that Kevin Hassett, White House economic adviser, has emerged as the frontrunner to succeed Jerome Powell as Federal Reserve Chair in 2026.
Analysts noted that Hassett’s perceived bias toward aggressive interest-rate cuts—in line with President Donald Trump’s long-standing demands—could weaken the dollar over time if he is eventually appointed.

Trump has repeatedly pushed for deeper and faster rate cuts, despite the Fed’s caution over persistent inflation.

December Rate Cut Expectations Remain Firm

Despite internal debate among policymakers, markets remain convinced that the Fed will cut rates by 25 basis points at its December 9–10 meeting. This follows similar cuts in September and October, reflecting the central bank’s growing prioritization of a softening labor market over elevated inflation readings.

According to CME’s FedWatch Tool, traders now price in an 85% probability of a December cut—more than double last week’s 39% odds.

Euro Slips; Peace Talks in Focus

The euro dipped 0.2% to $1.1580, with investors tracking developments in Ukraine-Russia peace discussions, a factor seen as potentially supportive for the single currency.
A top U.S. envoy is expected to travel to Russia next week, though reports suggest Moscow is unlikely to make major concessions in negotiations with Kyiv.

Yen Edges Higher as BOJ Rate Hike Bets Increase

The yen firmed 0.1% against the dollar, with traders increasingly expecting the Bank of Japan to potentially raise interest rates as early as next month.
The shift comes as the yen recently touched a 10-month low, prompting speculation that policymakers may tighten policy to stabilize the currency.