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The U.S. dollar held largely steady on Tuesday as traders braced for a widely expected interest-rate cut from the Federal Reserve, while the Australian dollar firmed after its central bank signaled no need for further easing.
The U.S. dollar index dipped 0.1% to 98.977, with investors preparing not only for the Fed’s decision but also for a packed week of global central bank meetings.
Markets Brace for Fed Cut; Key U.S. Data Ahead
Fed funds futures imply an 89.4% probability of a 25-basis-point cut at the central bank’s Dec. 9–10 meeting, according to CME’s FedWatch tool.
Traders are also awaiting:
- NFIB small business optimism index (Nov.)
- JOLTS job openings (Oct.)
Bond markets showed tentative calm, with the 10-year Treasury yield at 4.1605%, easing slightly after a three-day climb to near three-month highs.
Longer-term policy expectations remain uncertain. Investors are dialing back forecasts for aggressive easing in 2026 amid doubts that Kevin Hassett, the frontrunner to replace Jerome Powell, will maintain a dovish stance if he becomes Fed chair next May.
Euro Edges Higher After ECB Comments
The euro rose 0.1% to $1.1653, recovering from earlier pressure following a bund selloff.
ECB board member Isabel Schnabel told Bloomberg that the next policy move could theoretically be a rate hike, though not anytime soon. Her remarks added nuance to expectations that the ECB will keep policy on hold into 2026.
Aussie Dollar Gains After RBA Pushes Back on More Cuts
The Australian dollar climbed 0.3% to $0.6645 after the Reserve Bank of Australia kept rates unchanged at 3.6% for a third straight month, as expected.
The RBA warned inflation risks could be persistent. Governor Michele Bullock later added that further rate cuts are not needed, giving the Aussie an additional lift.
Yen Softens After Quake; Other Majors Mixed
The yen initially strengthened after a 7.5-magnitude earthquake struck northeastern Japan, prompting tsunami warnings. It later weakened slightly, trading 0.1% lower at 155.82 per dollar, as markets refocused on global rate expectations and a week loaded with central bank decisions.
Other major currencies:
- Offshore yuan (CNH): up 0.1% to 7.0623, after a Politburo statement signaled no urgency for new stimulus
- British pound: up 0.2% to $1.33470
- New Zealand dollar: up 0.3% to $0.57920
