Dollar higher, boost to safe-haven currencies fades

NEW YORK – The dollar index rose on Tuesday, after an initial boost to safe-haven currencies such as the greenback, Swiss franc and yen prompted by an announcement by Russia that it would lower its threshold for a nuclear strike faded following comments by Russian and US officials.

Ukraine used US ATACMS missiles to strike Russian territory for the first time, Moscow said, in an attack regarded by Russia as a major increase in hostilities on the war’s 1,000th day.

Putin approved the change to Russia’s nuclear doctrine days after two US officials and a source familiar with the decision said on Sunday that US President Joe Biden’s administration would allow Ukraine to use US-made weapons to strike deep into Russia.

The dollar index, which measures the greenback against a basket of currencies, rose 0.03% to 106.25 after reaching a high of 106.63 in the session, with the euro down 0.12% at USD 1.0586.

The initial reaction in markets faded somewhat after Russian Foreign Minister Sergei Lavrov said the country will “do everything possible” to avoid the onset of nuclear war, while showing approval for Germany’s decision on Monday not to provide long-range missiles to Ukraine, calling it “a responsible position.”

In addition, the US said it has not seen any reason to adjust its own nuclear posture in response.

“We’re seeing a reversal after Lavrov’s comments, also the US won’t respond to this change in the Russian nuclear doctrine, that’s played a role too in sentiment calming down here a bit,” said Erik Bregar, director, FX & precious metals risk management, at Silver Gold Bull in Toronto.

“A nice three-week flush of over-leveraged long positions and geopolitical risk hasn’t gone away, it’s still a crazy, dangerous world out there.”

The yen JPY= was unchanged to 154.68 per dollar after rising as much as 0.91% against the greenback. The Japanese currency was last up 0.11% to 163.74 against the euro after strengthening to a six-week high of 161.50.

The dollar had strengthened as much as 9% against the yen since the beginning of October to as much as 156.74, rising above the 156 mark for the first time since July last week and sparking the possibility Japanese authorities may once again step in to shore up the currency.

Against the Swiss franc, the dollar edged up 0.02% to 0.883 after earlier falling as much as 0.32% on the day.

The Russian rouble weakened 0.83% against the greenback to 100.571 per dollar. The official exchange rate of the Russian rouble weakened past 100 to the US dollar for the first time since October 2023.

The dollar index has been rallying on growing expectations the Federal Reserve may slow its path of interest rate cuts and on concerns incoming US President Donald Trump’s policies could reignite inflation.

Expectations for the path of rate cuts have been dialed back, while volatile, in recent weeks, with markets currently pricing in a 59.1% chance of a 25 basis point cut at the Fed’s December meeting, down from 76.8% a month ago, according to CME’s FedWatch Tool.

Kansas City Fed President Jeffrey Schmid said it remains uncertain how far interest rates can fall, but the recent cuts by the central bank indicate confidence that inflation is heading towards its 2% target.

The European Central Bank is also expected to continue cutting interest rates in an effort to stimulate growth in the region.

In the latest comments from ECB policymakers, Fabio Panetta said the central bank should cut interest rates so they no longer curb economic growth, or even stimulate it, and give more guidance now that post-pandemic shocks are waning and inflation is normalizing.

Panetta’s comments came after two top ECB policymakers on Monday signaled they were more worried about the damage that expected new US trade tariffs would do to growth than any impact on inflation.

Sterling weakened 0.04% to USD 1.2671.

(Reporting by Chuck Mikolajczak; Editing by Susan Fenton and Alistair Bell)

Oil settles flat as escalation of Ukraine war counters Sverdrup field restart

NEW YORK – Oil prices were broadly unchanged on Tuesday as signs of escalation of the Russia-Ukraine war kept investors cautious of supply disruptions, but the partial restart of production in Norway’s Johan Sverdrup oilfield limited gains.

Brent crude futures rose by a cent to settle at USD 73.31 per barrel. US West Texas Intermediate crude futures rose 0.3%, or 23 cents, to close at USD 69.39 a barrel.

For the first time, Ukraine used US ATACMS missiles to strike Russian territory on Tuesday, Moscow said. Russian foreign minister Sergei Lavrov described the attack as a Western escalation. Russian President Vladimir Putin lowered the threshold for a possible nuclear strike.

“This marks a renewed build-up in tensions in the Russia-Ukraine war and brings back into focus the risk of supply disruptions in the oil market,” ANZ Bank analyst Daniel Hynes said.

Market watchers also pointed to signs of higher crude oil purchases by top importer China. China’s crude imports are on track to end November at or close to all-time highs, StoneX energy analyst Alex Hodes said, referencing data from vessel tracker Kpler.

Weak imports by China so far this year have weighed heavily on oil prices, pulling Brent futures down 20% from their April peak of over USD 92 a barrel. China’s crude oil imports in October fell from a year earlier for the sixth straight month.

China likely stepped up oil purchases this month as current prices offer relatively good value, Hodes said.

Limiting oil’s ascent, Equinor resumed partial production from the Johan Sverdrup field in the North Sea, Western Europe’s largest oilfield, the day after a power outage there contributed to a 3% surge in oil price benchmarks.

The restart and a stronger US dollar weighed on market sentiment on Tuesday, UBS analyst Giovanni Staunovo said.

Oil prices also came under pressure after confidential reports by the U.N. nuclear watchdog, seen by Reuters, said Iran has offered to stop expanding its stock of uranium enriched to 60% purity, near the roughly 90% of weapons-grade.

US crude oil stockpiles rose by 4.75 million barrels in the week ended Nov. 15, market sources said on Tuesday citing figures from the American Petroleum Institute.

Analysts polled by Reuters on average expect to see a smaller build of around 100,000 barrels. The US Energy Information Administration is scheduled to report official stockpiles data on Wednesday at 10:30 a.m. EST.

(Reporting by Shariq Khan and Alex Lawler, additional reporting by Ahmad Ghaddar, Yuka Obayashi and Emily Chow; editing by Jason Neely, Louise Heavens, Susan Fenton and David Gregorio)

Yields drop on safety bid as Ukraine strikes Russia

NEW YORK – US Treasury yields fell on Tuesday as investors bought safe-haven US government bonds on concerns about escalating geopolitical tensions after Ukraine sent American missiles into Russian territory for the first time.

Ukraine used US ATACMS missiles to strike Russia, Moscow said, in an attack regarded by Russia as a major escalation on the war’s 1,000th day.

“It seems to be all flight to quality,” said Tom di Galoma, head of fixed income trading at Curvature Securities. “There is a ‘risk off’ bid with the Ukraine, Russia tension.”

Benchmark 10-year note yields were last down 3.6 basis points at 4.379%. Two-year yields fell 1.4 basis points to 4.27%.

The yield curve between two-year and 10-year notes flattened by around 2 basis points to 11 basis points.

Yields have risen in the past two months on stronger than previously anticipated US economic data. Expectations that Republicans will enact more growth-friendly and inflationary policies after winning control of Congress and the presidency added to the move, with many traders correctly predicting a ‘red wave’ before the election.

Donald Trump is expected to clamp down on illegal immigration and enact new tariffs after winning the Nov. 5 presidential election, but there remains a lot of uncertainty over how these policies may be implemented.

Traders are also focused on Trump’s pick for Treasury secretary for further clues on likely policies.

Still-strong economic data has also raised doubts on whether the Federal Reserve could pause its interest-rate cutting cycle, following 75 basis points of reductions since September.

Fed Chair Jerome Powell said on Thursday that ongoing economic growth, a solid job market, and inflation that remains above its 2% target mean the Fed does not need to rush to lower interest rates.

Traders are pricing in 59% odds that the US central bank will cut rates by 25 basis points at its Dec. 17-18 meeting, and a 41% chance of a pause, according to the CME Group’s FedWatch Tool.

It remains uncertain how far interest rates can fall, Kansas City Fed President Jeffrey Schmid said on Tuesday, adding that US monetary policy remains restrictive but not overly so.

Data on Tuesday showed that US single-family homebuilding tumbled in October as Hurricanes Helene and Milton depressed activity in the South.

The Treasury Department will sell USD 16 billion in 20-year bonds on Wednesday and USD 17 billion in 10-year Treasury Inflation Protected Securities on Thursday.

(Reporting By Karen Brettell; Editing by Andrea Ricci and Jonathan Oatis)

Gold hits 1-week high as Russia-Ukraine tensions boost rush to safety

Nov 19 (Reuters) – Gold prices climbed for a second consecutive session on Tuesday, hitting a one-week high as mounting Russia-Ukraine tensions sparked a rush for safe-haven assets, while investors awaited key signals on the Federal Reserve’s interest rate plans.

Spot gold rose 0.6% to USD 2,628.76 per ounce by 01:42 p.m. ET (1842 GMT), hitting its highest level since Nov.11. US gold futures settled 0.6% higher at USD 2,631 per ounce.

On Monday, gold jumped 2%, marking its biggest one-day rise since mid-August and rebounding sharply from a two-month low hit last week.

“We think that the overnight reports on Russia changing its nuclear doctrine following Ukraine’s first long-range missile strike on Russian territory have led to some safe-haven flows in gold,” said Daniel Ghali, commodity strategist at TD Securities.

“Barring another consolidation in prices, speculative investors just don’t have enough dry powder in their war chest for gold to resume its upward trajectory at this juncture.”

Gold’s allure is bolstered by geopolitical tensions, economic risks and a low interest rate environment.

Multiple Fed officials are scheduled to speak this week, which could offer further insights about the rate-cut path.

Traders currently see a 63% chance of a 25-basis-point cut in December.

“Since the arguments in favor of gold have not diminished, the lower price level is apparently leading to buying interest,” Commerzbank analysts noted.

Geopolitical uncertainty, central bank buying, and swelling deficits in the United States and other western nations are further supporting gold, the bank said.

Also supporting bullion was the dollar’s pullback that comes after a strong rally last week to a one-year high fueled by the Trump trade euphoria. A weaker dollar makes gold more appealing to buyers in other currencies.

Among other metals, spot silver added 0.1% to USD 31.17, hitting a one-week high earlier in the session. Platinum gained 0.5% to USD 971.66.

Palladium XPD= rose 2.8% to USD 1,032.99, hitting a near two-week high after rising more than 5% on Monday.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Maju Samuel, Shounak Dasgupta and Mohammed Safi Shamsi)

US-Russia fright fades, Nvidia vigil almost over

Geopolitical jitters rippled through world markets on Tuesday but subsided as the US trading session progressed, allowing for a more positive tone in Asia on Wednesday as investors gear up for Nvidia’s earnings announcement later in the day.

The local calendar on Wednesday sees the release of South Korean producer price inflation and trade figures from Japan and Taiwan. The latter is sometimes seen as a proxy for global demand as export orders include shipments from TSMC, the world’s leading contract chipmaker, and sales to China.

Monetary policy decisions from China and Indonesia are the main regional events. Both central banks are expected to leave rates on hold as policymakers seek to protect their exchange rates and keep their powder dry ahead of possible protectionist trade policies from the new US administration next year.

The global backdrop to Wednesday’s Asian session looks relatively constructive, if tense. Investors will be on their guard after the rapid escalation in tensions between the US and Russia over Ukraine.

After two US officials and a source familiar with the decision said on Sunday that the Biden administration allowed Ukraine to use US-made weapons to strike deep into Russia, President Vladimir Putin lowered the threshold for a nuclear strike in response to a broader range of conventional attacks.

This pushed global stocks into the red and sparked a spike in volatility on Tuesday – the S&P 500 VIX ‘fear index’ of implied US equity volatility briefly popped up to its highest level since the Nov. 5 presidential election.

But the angst subsided. The S&P 500 and Nasdaq ended in the green, volatility and Treasury yields eased, and the US dollar was little changed, making for a much more favorable backdrop for Asia on Wednesday.

Attention now turns to Nvidia, and analysts are hopeful the world’s largest company will deliver again.

The firm is expected by Wall Street to report a 82.8% increase in revenue to USD 33.125 billion in the August-October period, from USD 18.12 billion a year ago, according LSEG data.

Back in Asia, the People’s Bank of China is expected to leave benchmark lending rates unchanged on Wednesday, as last month’s rate cut squeezes banks’ profits and the yuan comes under fresh pressure with Donald Trump’s return to the White House next year.

All 28 market watchers in a Reuters poll think the PBOC’s one-year and five-year loan prime rates will be left on hold at 3.10% and 3.60%, respectively.

Bank Indonesia will also leave its seven-day reverse repo rate unchanged, at 6.00%, according to 25 of 34 survey respondents. Some of them revised their previous calls for a rate cut, and money markets now only expect a one-in-five chance of a cut next month.

Here are key developments that could provide more direction to markets on Wednesday:

– China interest rate decision

– Indonesia interest rate decision

– Japan trade (October)

(Reporting by Jamie McGeever; Editing by Bill Berkrot)

Nvidia’s options primed for USD 300-billion price swing after earnings

NEW YORK – Options traders are primed for a nearly USD 300-billion swing in Nvidia’s market value following the chipmaker’s quarterly results on Wednesday, US options market data showed.

Nvidia options implied an 8.5% swing for the shares in either direction following the results, which will be reported after markets close, according to data from options analytics service ORATS.

That is in line with previous percentage moves following results over the last 12 quarters. But with the AI-chipmaker’s market cap having grown to USD 3.44 trillion, the expected swing in market value is close to the biggest ever, at about USD 292 billion.

A move of that size would dwarf the market cap of about 95% of S&P 500 constituents.

Post-earnings moves in Nvidia’s shares have typically undershot market expectations. Larger-than-expected moves, however, have tended to be to the upside, said ORATS founder Matt Amberson.

Of the last 12 quarterly earnings reports, five post-earnings moves have been outside what has been expected by the market. Of those, all have seen the stock price go higher, Amberson said.

Christopher Jacobson, a strategist at Susquehanna Financial Group, wrote on Monday that traders are assigning a slightly higher probability to an outsized move to the upside than to the downside.

Results for the chipmaker – which is at the heart of the generative artificial intelligence boom – could be a key factor in determining the market’s trajectory. Investors are turning their focus to Nvidia following a post-US election rally that has stalled in recent days.

The S&P 500 is up 23% year-to-date despite a decline last week.

“The market will extrapolate whatever Nvidia says to the entire AI trade,” said Nancy Tengler, CEO and chief investment officer at Laffer Tengler Investments, in a note.

Nvidia has bested lofty Wall Street revenue expectations for the past eight quarters. But with analysts expecting a slower pace of growth, how the company overcomes delays and supply-chain issues is likely to be an important factor for its stock price.

The chipmaker is expected to report third-quarter sales surging 82.8% to USD 33.13 billion, according to data compiled by LSEG.

On Monday, Nvidia shares finished down 1.3% to USD 140.15. For the year, the stock is up about 180%, making it one of the top performers in the S&P 500 index.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Rod Nickel)

Seeking global steer, watching Fed pendulum swings

A look at the day ahead in Asian markets.

Investors in Asia will likely take their cue from global dynamics and drivers given the dearth of local market-moving events on Tuesday, and if that’s the case, the signs are reasonably encouraging.

The rocky ride last week that saw a sharp reversal in stocks and risk appetite gave way to a much smoother start to this week on Monday. Broad measures of implied volatility, bond yields and the dollar all fell to varying degrees, paving the way for a rebound in riskier assets.

There doesn’t appear to be any fresh catalyst or impetus for the generally upbeat start to the week, so equally, one could argue that there’s little guarantee Monday’s global momentum will continue into Asia on Tuesday.

But last week’s selling was heavy, and many shorter-term speculative positions will have been cleaned out. The MSCI World and Nasdaq both posted their biggest losses in 10 weeks, and the MSCI Asia ex-Japan index had its worst week since June 2022.

World stocks snapped a four-day losing streak on Monday while Asian stocks climbed for a second straight day, a surprisingly rare feat over the past six weeks.

Investors continue to weigh up the outlook for US interest rates in light of Fed Chair Jerome Powell’s remarks last Thursday that the central bank is in no rush to raise them, and last week’s relatively strong US economic data.

There’s a case to make that the ‘hawkish’ swing in the rates market’s implied Fed pricing since Powell’s comments – and indeed, over the last several weeks – has limited room to run.

It wasn’t that long ago talk of a possible 75 basis point rate cut in December was circulating and traders were betting on the fed funds rate ending next year around 2.75%. Now, even a 25 bps rate cut next month is by no means assured, and the implied end-2025 fed funds rate is not much below 4.00%.

Perhaps the pendulum has swung a little too far.

Investors may also be reluctant to take firm directional bets ahead of Nvidia’s results on Wednesday. The semiconductor giant, at the vanguard of the global AI frenzy, is the world’s most valuable company, and an earnings ‘beat’ or ‘miss’ will help set the global market tone for the rest of the week and probably year.

The local calendar in Asia on Tuesday is light. The main highlight will be the Reserve Bank of Australia‘s minutes of its last policy meeting, where it kept the cash rate steady at 4.35% and signaled the need to remain “vigilant” to upside inflation risks.

The RBA is only expected to start its easing cycle in May next year, and even then cut rates just half a percentage point by next December.

Editing by Deepa Babington)

Oil prices rise over 3% on Sverdrup outage, Ukraine war escalation

NEW YORK – Oil prices climbed more than USD 2 a barrel on Monday after news that crude production at Norway’s Johan Sverdrup oilfield had been halted, which added to earlier gains stemming from escalation of the Russia-Ukraine war.

Brent crude futures settled at USD 73.30 a barrel, gaining USD 2.26, or 3.2%. U.S. West Texas Intermediate crude futures settled at USD 69.16 a barrel, rising USD 2.14, or 3.2%.

Equinor said it had halted output from its Johan Sverdrup oilfield, western Europe’s largest, due to an onshore power outage. Work to restart production was under way, an Equinor spokesperson said, but it was not immediately clear when it would resume.

Oil prices extended their gains on the outage news, which indicated a possible tightening of the North Sea crude market, UBS analyst Giovanni Staunovo told Reuters. Physical supply of crude oil from the North Sea underpins the Brent futures complex.

Kazakhstan’s biggest oil field Tengiz, operated by US major Chevron, has reduced oil output by 28%-30% due to ongoing repairs, helping to further tighten global supplies. Repairs were expected to be complete by Saturday, the country’s energy ministry said.

Prices also climbed as Russia’s war in Ukraine escalated over the weekend.

In a significant reversal of Washington’s policy, President Joe Biden’s administration allowed Ukraine to use US-made weapons to strike deep into Russia, two US officials and a source familiar with the decision said on Sunday.

The Kremlin said on Monday that Russia would respond to what it called a reckless decision by Biden’s administration, having previously warned that such a decision would raise the risk of a confrontation with the US-led NATO alliance.

“Biden allowing Ukraine to strike Russian forces around Kursk with long-range missiles might see a geopolitical bid come back into oil, as it is an escalation of tensions there in response to North Korean troops entering the fray,” IG markets analyst Tony Sycamore said.

There has been little impact on Russian oil exports so far, however oil prices could rise further if Ukraine targets more oil infrastructure, said Saul Kavonic, an energy analyst at MST Marquee.

Russia unleashed its largest airstrike on Ukraine in almost three months on Sunday, causing severe damage to the country’s power system.

Brent and WTI fell more than 3% last week due to weak data on China’s refinery run rates, and after the International Energy Agency forecast that global oil supply would exceed demand by more than 1 million barrels per day in 2025, even if output cuts remain in place from OPEC+.

Traders began shifting WTI trades to the January contract ahead of the expiration of the December contract on Wednesday. The spread between the two contracts flipped for the first time since February into a contango structure, where the later contract traded higher than the front-month contract, meaning traders expected price to rise.

“The expiration is going to a wild one,” said Bob Yawger, director of energy futures at Mizuho.

(Reporting by Laila Kearney, Paul Carsten, Robert Harvey and Enes Tunagur in London, and Florence Tan in Singapore; Editing by Kirsten Donovan, Mark Potter, Alexander Smith, Rod Nickel and Paul Simao)

Oil settles down 2% on weaker Chinese demand, uncertainty over Fed rate cut

HOUSTON – Oil prices settled down more than 2% on Friday as investors fretted about weaker Chinese demand and a potential slowing in the pace of US Federal Reserve interest rate cuts.

Brent crude futures settled down USD 1.52, or 2.09%, to USD 71.04 a barrel. US West Texas Intermediate crude futures (WTI) settled down USD 1.68, or 2.45%, at USD 67.02.

For the week, Brent fell around 4%, while WTI declined around 5%.

China’s oil refiners in October processed 4.6% less crude than a year earlier because of plant closures and reduced operating rates at smaller independent refiners, data from the National Bureau of Statistics showed on Friday.

The country’s factory output growth slowed last month and demand woes in its property sector showed few signs of abating, adding to investors’ concerns over the economic health of the world’s largest crude importer.

“The headwinds out of China are persisting, and whatever stimulus they put forward could be damaged by a new round of tariffs by the Trump administration,” said John Kilduff, partner at Again Capital in New York.

US President-elect Donald Trump has pledged to end China’s most-favored-nation trading status and impose tariffs on Chinese imports in excess of 60% – much higher than those imposed during his first term.

Goldman Sachs Research economists have modestly lowered their 2025 growth forecast for China, the bank said in a note, following on expectations of significant tariff increases under Trump.

“However, we would likely make larger downgrades if the trade war were to escalate further,” Goldman Sachs Research chief economist, Jan Hatzius said in the note.

Oil prices also fell this week as major forecasters indicated slowing global demand growth.

“Global oil demand is getting weaker,” said International Energy Agency (IEA) Executive Director Fatih Birol on Friday at the COP29 summit.

“We have been seeing this for some time and this is mainly driven by the slowing Chinese economic growth and the increasing penetration of electric cars around the world.”

The IEA forecasts global oil supply to exceed demand by more than 1 million barrels per day in 2025 even if cuts remain in place from OPEC+.

OPEC, meanwhile, cut its forecast for global oil demand growth for this year and 2025, highlighting weakness in China, India and other regions.

FED RATE CUT IN THE BALANCE

US retail sales increased slightly more than expected in October, suggesting the economy kicked off the fourth quarter on a strong note.

“The economic data this morning was strong and notable so that is keeping things somewhat stable with regard to what the US demand picture should be,” Again Capital’s Kilduff said.

The data added to the debate among Federal Reserve policymakers over the pace and extent of interest rate cuts as investors further downgraded their expectations for a rate reduction at the central bank’s December meeting.

Lower interest rates typically spur economic growth, aiding fuel demand.

Federal Reserve Bank of Boston President Susan Collins, however, did not rule out a December rate cut when speaking on Bloomberg’s television channel.

“Looking at those numbers, there is nothing forcing the Fed to get real crazy about it, I think the odds for a 25 basis rate cut for December have dropped to between high 50s-60%,” said chief economist at Matador Economics, Tim Snyder.

“I wouldn’t be surprised if we do not see anything in December, and have to wait and see how the year ends,” Snyder added.

(Reporting by Georgina McCartney in Houston, Robert Harvey and Enes Tunagur in London, Nicole Jao in New York and Gabrielle Ng in Singapore; Editing by Kirsten Donovan, Marguerita Choy and Andrea Ricci)

Dollar notches weekly gain as traders reassess rate cut expectations

NEW YORK/LONDON – The US dollar was set for its biggest weekly gain in over a month on Friday, as markets reassessed expectations of future interest rate cuts and with the view that President-elect Donald Trump’s policies could be inflationary.

The dollar has benefited from market expectation that Trump administration policies, including tariffs and tax cuts, could stoke inflation, leaving the Federal Reserve less room to cut interest rates.

Fed Chairman Jerome Powell said on Thursday the US central bank did not need to rush to lower interest rates, prompting traders to axe their more aggressive bets on a rate cut next month and beyond.

The greenback was set to notch a weekly gain against the Japanese yen after it traded above 156 yen this week for the first time since July. It was last down 1.4% to 154.145 per dollar.

The euro EUR=EBS was headed for the second straight week of losses after slumping to its lowest level since October 2023. It was last up at USD 1.054025.

“Today is more about the Fed than anything else, and I’m a bit surprised that the euro is a little stronger in the face of what were perceived to be more hawkish comments from Powell,” said Thierry Albert Wizman, global FX and rates strategist at Macquarie in New York.

“People are maybe thinking that there’s going to be a bit more chaos next year in view of some of the questionableness of these (US cabinet) candidate appointments. So I can see why people are losing a little bit of faith in the Trump trade and the American exceptionalism story generally.”

Commerce Department data on Friday showed that US retail sales increased slightly more than expected in October, but underlying momentum in consumer spending appeared to slow at the start of the fourth quarter.

Boston Fed president Susan Collins in comments published Friday in the Wall Street Journal also said rate cuts could be paused as soon as the Dec. 17-18 meeting, depending on upcoming data on jobs and inflation. The probability of a December cut has dropped to around 61% from closer to 82% a day ago, according to CME’s FedWatch tool.

Sterling was on track for its steepest weekly fall since January 2023, at roughly 2.4%. It was last down 0.38% at USD 1.2620. The pound showed little reaction to data showing Britain’s economy contracted unexpectedly in September and growth slowed to a crawl over the third quarter.

The dollar index is trading around a one-year high against a basket of currencies at 107.07 =USD, having risen nearly 1.65% this week, set for its best performance since September. It was last down 0.19% at 106.68.

In cryptocurrencies, bitcoin traded around USD 90,000, as some investors took profits after a stellar run. Bitcoin gained 2.64% to USD 90,545.00. Ethereum declined 2.17% to USD 3,051.30.

“Today is really just an ahead-of-weekend consolidation; we haven’t taken out any key levels like 106 in the euro like 127 in sterling,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

“The market overreacted to Powell yesterday, but US interest rates are still firm. So whatever forces were unleashed by the US election, they haven’t been exhausted yet.”

(Reporting by Chibuike Oguh in New York and Amanda Cooper in London; editing by Jonathan Oatis)

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