The US Dollar (USD) is trading a little softer overall in quiet trade. Overnight news is relatively limited and the softer USD tone rather reflects the decline in US yields seen yesterday, a modest relief rally for the EUR and some JPY gains on the back of mixed/slightly hawkish comments from the BoJ’s Nakamura last night, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
USD mixed to a little softer
“The policymaker, who resides on the more dovish side of the board, expressed some doubt about the sustainability of wage gains in Japan but also stated that he was not objecting to a rate hike. Pricing for the December 19th meeting picked up marginally again to reflect 9-10bps of expected tightening. Japan releases Labour Cash Earnings and Household spending data tonight.”
“Fed Chair Powell commented yesterday that the Fed was ‘not quite there’ on inflation and that policymakers can afford to be “cautious” as the Fed tries to find neutral. The comments prompted a very minor—and short-lived—rally in Dec FOMC swaps but had little impact on the USD. Markets continue to price 18-19bps of easing risk for this month’s Fed decision. Friday’s US NFP data may be more formative for market thinking on the rate outlook.”
“Technical trends in the DXY are ledging a little softer today. The charts show the DXY leaning a little harder on bull trend support (106.06) that has guided the market high through Q4 so far. Loss of support here may see the index run lower to test key short-term support at 105.35. The index has traded at a slightly larger premium to (spread-based) value since the election; estimated DXY equilibrium currently sits at 104.67. US data reports today include Trade and weekly claims. The Fed’s Barkin speaks on the outlook at 12.15ET.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD consolidates near two-week high, looks to US NFP for fresh impetus
AUD/USD holds steady around the 0.6335 area during the Asian session on Friday as traders now await the US NFP report. Bets that the Fed will cut rates further amid concerns over failing US economic growth keep the USD depressed near a multi-month low and act as a tailwind for spot prices, though tariff jitters warrant caution for bulls.
USD/JPY seems vulnerable amid divergent Fed-BoJ expectations; US NFP awaited
USD/JPY languishes near its lowest level since October touched on Thursday amid a bearish USD, led by bets that the Fed could cut rates multiple times in 2025 amid slowing US economic growth. Moreover, the hawkish sentiment surrounding the BoJ's policy outlook underpins the JPY and validates the negative bias for the pair.
Gold price remains depressed ahead of US NFP; trade jitters to limit losses
Gold price trades with negative bias for the second straight day, though a combination of factors continues to act as a tailwind ahead of the crucial US NFP report later this Friday. Rising trade tensions continue to weigh on investors' sentiment.
XRP investors enlarge realized profits to $2 billion despite potential inclusion in US crypto reserve
Ripple's XRP managed to record gains on Thursday despite investors expanding their total realized profits to about $2 billion since the beginning of the week.
Make Europe great again? Germany’s fiscal shift is redefining the European investment playbook
For years, Europe has been synonymous with slow growth, fiscal austerity, and an overreliance on monetary policy to keep its economic engine running. But a major shift is now underway. Germany, long the poster child of fiscal discipline, is cracking open the purse strings, and the ripple effects could be huge.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.