FX.co ★ Dollar Extends Fall on Fed Rate Cut Bets

The dollar index dropped below 99.5 on Thursday, marking its fourth consecutive decline and reaching its lowest point in nearly two weeks. This decline is fueled by growing anticipation of further rate reductions by the Federal Reserve. Currently, market forecasts suggest an approximately 85% probability of a 25 basis point rate cut in December, a significant increase from about 30% the week prior. Additionally, markets are anticipating three more rate cuts by the end of 2026. These expectations intensified following reports that Kevin Hassett, Director of the White House National Economic Council, is the frontrunner for the next Chair of the Federal Reserve. Investors perceive this potential appointment as adhering to President Donald Trump’s inclination for reduced interest rates. Meanwhile, data released on Wednesday revealed an unexpected dip in initial jobless claims accompanied by a stronger-than-anticipated performance in durable goods orders. The dollar weakened against most major currencies, recording its largest losses against the New Zealand and Australian dollars. Trading volumes are likely to remain low through Friday due to the Thanksgiving holiday.