Dollar heads for its weakest week since July as expectations of a Fed rate cut grow

The U.S. dollar is on track for its sharpest weekly decline since late July, pressured by growing expectations of another Federal Reserve rate cut following softer labor data. Despite ongoing concerns from policymakers about elevated inflation, markets are increasingly confident that easing is coming. Fed funds futures now imply an 87% chance of a cut at the December 9–10 meeting, up from 71% a week earlier, according to CME’s FedWatch Tool.
With the U.S. government releasing delayed economic data after a record 43-day shutdown, Fed officials will enter their pre-meeting blackout period on Saturday.

The dollar index slipped 0.09% to 99.44 and is on pace for a 0.61% weekly loss—its steepest since July 21.

Attention also turns to Japan, where traders will watch for any hint of a rate hike when Bank of Japan Governor Kazuo Ueda speaks on Monday. Expectations of tighter BOJ policy have continued to support the yen.

Calm in Forex Markets After CME Outage
Overnight, a cooling issue at CME Group’s CyrusOne data centers triggered an outage that suspended trading on its major currency platform as well as futures tied to equities and commodities. Trading resumed by 13:35 GMT after an 11-hour disruption, LSEG data showed.
Despite the downtime, FX markets remained largely stable during U.S. hours, with activity already subdued following Thursday’s Thanksgiving holiday