FX.co ★ Dollar Set for Second Weekly Decline

The dollar index stabilized at around 99 on Friday, although it remained on track for its second consecutive weekly decline. This movement has been influenced by expectations of interest rate cuts by the Federal Reserve. Current market predictions suggest an 87% likelihood that the Fed will implement a 25 basis point rate cut next week, with the anticipation of 2 to 3 additional cuts throughout the next year. Speculation that economic adviser Kevin Hassett might replace the current Fed Chair Powell in May has further added pressure to the currency, as such a change could indicate a shift toward more aggressive policy easing. Adding to this context, data released on Thursday revealed that initial jobless claims dropped to their lowest level in over three years last week, though these numbers were impacted by the typically unpredictable Thanksgiving period. Meanwhile, the Challenger report showed that layoffs increased to 71,321 in November, marking the highest figure for that month since 2022. Looking forward, investors are keenly anticipating the delayed September report on the personal consumption expenditures index, which the Fed regards as its primary inflation measure, along with data on consumer spending and income levels.