The Japanese Yen touched 157.22 against the USD, the lowest since November 2025. Over the past 4 weeks, US Dollar Japanese Yen lost 0.19%, and in the last 12 months, it increased 0.52%.

Japanese Yen Hits 4-week Low

The Indonesian rupiah dipped toward IDR 16,750 per dollar on Friday, extending losses for a third session and hovering near its lowest level in a month. Pressure stemmed from the central bank’s dovish stance despite total rate cuts of 150bps between September 2024 and September 2025. Earlier this week, the board kept the key rate at 4.75% for a third meeting but signaled scope for further easing, citing mild inflation and the need to support growth following the recent disaster in Sumatra. The rupiah has been one of Asia’s weakest currencies so far this year, down about 4% against the dollar. To stabilize the market, the government mandated natural resource exporters retain all FX earnings in state-owned banks for at least a year starting January 1, with conversion capped at 50%. The rule has drawn pushback from some groups over liquidity concerns, as current regulations allow deposits in any domestic bank. Globally, the U.S. dollar index held near 98.4, ending the week little changed.

Rupiah Weakening Persists for 3rd Session

The Japanese yen slipped past 156 per dollar on Friday, touching an over one-week low after Bank of Japan Governor Kazuo Ueda refrained from signaling a clear path for further rate hikes, emphasizing flexibility to respond to future economic and financial developments. Ueda also noted ongoing uncertainty around the neutral interest rate, the level at which monetary policy neither stimulates nor restrains economic activity. The governor added that the BOJ is maintaining close communication with the government amid concerns over Prime Minister Sanae Takaichi’s preference for looser monetary policy. Earlier, the central bank raised its benchmark rate by 25 basis points to 0.75%, as widely expected, marking its highest level since 1995 as inflation has remained above target for an extended period. Japan’s headline inflation eased slightly to 2.9% in November from 3% in October but stayed above the BOJ’s 2% target for the 44th consecutive month, while core inflation held steady at 3%.

Yen Weakens as BOJ Signals Caution

The offshore yuan weakened to around 7.03 per dollar, retreating from an over one-year high hit in the previous session, dragged down by a weaker-than-expected daily fixing. The People’s Bank of China set the midpoint rate at 7.0550 per dollar, 172 pips weaker than Reuters’ estimate. These soft fixings have persisted since late November, highlighting the central bank’s efforts to rein in an overly rapid appreciation of the currency. Meanwhile, investors are bracing for the upcoming one-year and five-year loan prime rate decisions expected over the weekend, which may help gauge overall economic conditions. Attention is also on the Standing Committee of the 14th National People’s Congress, which is scheduled to convene its 19th session in Beijing from December 22 to 27. Despite Friday’s modest losses, the yuan remains on track to post a fourth consecutive weekly gain, marking its longest winning streak since June.

Offshore Yuan Weakens, Still Set for 4th Weekly Gain

The Australian dollar held steady around $0.661, hovering two-week lows and headed for its first weekly decline in a month, as investors awaited the Reserve Bank’s December meeting minutes for clearer guidance on the policy outlook. The minutes, due next week, are expected to provide insight into the board’s discussions on potential future tightening and its inflation concerns. Views among economists remain mixed, with some anticipating a February rate hike, while others expect rates to stay on hold unless near-term inflation surprises prompt earlier action. The November consumer price report is due January 7, with a more comprehensive December and fourth-quarter figures on January 28. A quarterly rise of 0.8% or more in trimmed mean inflation could prompt the RBA to hike rates at its February meeting. Markets wagered a 25% chance of a February move, rising to 40% from March and 70% for May.

Australian Dollar Set for Weekly Decline

The Japanese yen weakened past 155.5 per dollar on Friday, extending recent losses as investors positioned cautiously ahead of the Bank of Japan’s upcoming policy decision. The central bank is widely expected to raise its policy rate by 25 basis points to 0.75% as inflation stays above the central bank’s 2% target. Japan’s headline inflation eased slightly to 2.9% in November from 3% in October but stayed above the BOJ’s target for the 44th consecutive month, while core inflation held steady at 3%. Market attention is focused on Governor Kazuo Ueda’s post-meeting press conference for signals on whether the central bank will continue hiking rates next year. Meanwhile, Prime Minister Sanae Takaichi, a supporter of looser monetary policy, reportedly told a business lobby on Wednesday that Japan should prioritize proactive fiscal spending rather than excessive tightening to stimulate growth and boost tax revenues.

Yen Slips Ahead of BOJ Decision

The dollar index hovered around 98.4 on Friday, poised to finish the week largely unchanged as investors weighed the prospects for further Federal Reserve rate cuts next year amid soft inflation and labor market signals. November’s CPI report showed headline inflation at 2.7%, the lowest since July and below market expectations of 3.1%, while core inflation eased to 2.6%, the slowest pace since early 2021. Meanwhile, data earlier this week indicated that the unemployment rate rose to 4.6% in November, the highest level since 2021. The combination of subdued inflation and signs of a cooling labor market provides the Fed with greater flexibility to reduce rates in 2026, although markets expect policy to remain on hold in January. Meanwhile, Trump said he will soon announce the next Fed chair, who he expects will implement substantial rate cuts, with economic adviser Hassett, former Fed Governor  Warsh, and current Fed Governor Waller all viewed by markets as potential frontrunners.

Dollar Set to End Week Little Changed

The Mexican peso strengthened to $18, the highest since July 2024, following the Bank of Mexico’s decision to cut its benchmark interest rate by 25 bps to 7%, as expected. The move, part of a year-long easing cycle, signals the central bank’s confidence that inflation will gradually return to its 3% target despite persistent core inflation above 4% and a weak domestic economy. The peso’s gains were also supported by US inflation data showing easing price pressures in November. Core CPI rose 2.6% year-on-year, the slowest pace since early 2021, while headline CPI increased 2.7%, slightly under expectations. The report weighed on the dollar, reinforcing expectations that US inflation may be cooling, although caveats due to the federal government shutdown have left uncertainty over the Fed’s rate trajectory.

Mexican Peso Strengthens to July 2024 Highs

The British pound strengthened to $1.34, approaching again two-month highs, as traders digest the latest monetary policy decision from the Bank of England. The central bank lowered the bank rate by 25bps as expected, but policymakers remained divided and hinted there was limited space for more easing. The vote split was 5–4, with Governor Andrew Bailey backing a cut this time. Policymakers reiterated their guidance for a “gradual” pace of further easing. Markets are now pricing in about 62 points of easing from the central bank by the end of next year, compared to about 66 points before the decision. The rate cut, which followed pauses in September and November, comes amid easing inflation and growing signs of economic strain. UK annual inflation slowed to 3.2% in November, its lowest level in eight months and below the BoE’s 3.4% forecast. Meanwhile, GDP contracted for a second consecutive month in October, and private-sector wage growth continued to moderate.

British Pound Strengthens After BoE

The dollar index edged down to 98.3 after US inflation data showed price pressures easing in November. Core CPI rose 2.6% YoY, the slowest pace since early 2021 and down from 3% two months earlier, while headline CPI increased 2.7%. The report offered some relief after months of sticky inflation, weighing slightly on the dollar as it reinforced expectations that price pressures are cooling. However, the data came with major caveats due to the federal government shutdown, which limited the BLS’s ability to collect October prices and assess month-over-month changes. Despite signs of easing inflation, uncertainty remains over the Fed’s rate path, with policymakers divided after a third consecutive rate cut and Chair Powell warning the CPI figures may be distorted by the shutdown.

DXY Falls as Inflation Cools

The Euro pared losses to around $1.1733 after the ECB left interest rates unchanged, a decision that met expectations and offered little direction for markets. Policymakers judged current rates as broadly neutral, neither restricting nor stimulating economic activity, and reiterated a data-dependent, meeting-by-meeting approach without committing to a specific rate path. New staff projections showed inflation staying close to the 2% target, with headline inflation seen at 1.9% in 2026, 1.8% in 2027 and 2.0% in 2028, while core inflation is only expected to dip slightly below 2% in 2027. Growth forecasts were revised higher, supported by domestic demand, with GDP growth seen at 1.4% in 2025, 1.2% in 2026 and 1.4% through 2028.

Euro Pares Losses After ECB Decision

The British pound remained around at $1.33 after the Bank of England cut the bank rate by 25 basis points at its final meeting of the year, in line with expectations. The vote split was also as anticipated, at 5–4, with Governor Andrew Bailey backing a cut this time. Policymakers reiterated their guidance for a “gradual” pace of further easing, while noting that future decisions would be more finely balanced. Markets are now pricing in about 62 points of easing from the central bank by the end of next year, compared to about 66 points before the decision. The rate cut, which followed pauses in September and November, comes amid easing inflation and growing signs of economic strain. UK annual inflation slowed to 3.2% in November, its lowest level in eight months and below the BoE’s 3.4% forecast. Meanwhile, GDP contracted for a second consecutive month in October, and private-sector wage growth continued to moderate.

British Pound Little Changed after BoE

The Indonesian rupiah weakened past IDR 16,730 per dollar on Thursday, extending losses for a second straight session as bets grew that Bank Indonesia may resume its rate-cut cycle. While the central bank kept its policy rate at 4.75% for a third consecutive meeting on Wednesday, the move offered little support to the currency. Governor Perry Warjiyo reiterated that policymakers still have room to ease, citing a subdued inflation outlook for 2026 and the need to support economic growth. The board has cut rates by a total of 150bps between September 2024 and September 2025. Inflation has remained within the central bank’s 1.5%–3.5% target range for most of the year and is expected to stay well anchored next year, reinforcing views of further policy accommodation. Against this backdrop, the rupiah has been among the weakest emerging Asian currencies year-to-date, down about 3.9% against the dollar. Meanwhile, the U.S. dollar index held around 98.4, ahead of the November CPI report.

Rupiah Extends Decline

The New Zealand dollar fell to $0.576, hovering at its lowest level in nearly two weeks, even as data showed the economy grew more than expected in the third quarter. GDP expanded by 1.1% in the September quarter after a 1% contraction in the previous period, coming above market expectations of a 0.9% increase and the Reserve Bank’s estimate of a 0.4% rise. Despite the strong outcome, significant spare capacity remains in the economy, suggesting the renewed growth is unlikely to fuel inflation over the coming year. That has reduced expectations of an imminent rate hike. Investors now assign a 40% probability to a rate increase by July next year, down from around 50% before the data was released. RBNZ Governor Anna Breman also reiterated this week that rates are likely to remain at current levels through 2026.

New Zealand Dollar Weakens Despite Strong GDP Data

The Australian dollar weakened below $0.660 on Thursday, marking its sixth straight session of losses to hit a two-week low, as broad risk-off sentiment across financial markets pressured the currency. The Aussie, often viewed as a gauge of global risk, has in recent months moved closely in line with Wall Street. This link was evident as global equities retreated on renewed tech selling, driven by concerns that firms are taking on more debt to fund artificial intelligence development. Despite this caution, investors are still pricing in at least one rate hike by the Reserve Bank of Australia next year, with a 25% chance for February, rising to 40% in March and 70% by May. Additionally, the Australian government’s sharp inflation outlook revision on Wednesday reinforced the central bank’s hawkish stance. Market focus now turns to next week’s release of the RBA’s December meeting minutes, expected to provide insight into the board’s inflation concerns and potential future tightening.

Australian Dollar Hits Two-Week Low

The Japanese yen weakened toward 156 per dollar on Thursday, extending losses from the previous session as concerns over Japan’s deteriorating fiscal outlook weighed on the currency. Pressure intensified after Prime Minister Sanae Takaichi reiterated plans for proactive fiscal spending aimed at supporting growth and boosting tax revenues, raising fears of further strain on public finances. Attention is also focused on the Bank of Japan, which begins a two day policy meeting and is widely expected to raise its policy rate by 25 basis points to 0.75% as elevated food costs keep inflation above the central bank’s 2% target. Markets will closely monitor Governor Kazuo Ueda’s post meeting remarks for guidance on the policy outlook for next year, amid speculation that rates could rise to 1% by July. Externally, the yen also softened against the dollar ahead of key US inflation data, while Federal Reserve officials remain divided over the scope for further rate cuts next year.

Yen Weakens on Takaichi Remarks

The dollar index hovered around 98.4 on Thursday, holding onto gains from the previous session as investors positioned ahead of the closely watched November CPI report, which is expected to show price pressures remain above the Federal Reserve’s target. Mixed November labor market data released earlier in the week did little to alter market expectations, with investors still pricing in at least one Meanwhile, Fed Governor Christopher Waller, who is under consideration to become chair of the central bank, said there remains scope to cut rates amid signs of softening in the job market. In contrast, Atlanta Fed President Raphael Bostic signaled a more cautious stance, saying he does not expect further reductions in borrowing costs in 2026. Attention is also turning to monetary policy decisions from other major central banks, with the European Central Bank and Bank of England set to announce later today, followed by the Bank of Japan on Friday.

Dollar Holds Steady Ahead of CPI Report

The dollar index edged up to 98.3 on Wednesday, but remained close to two-month lows, as traders continued to assess the Federal Reserve’s policy outlook for 2026. Federal Reserve Governor Christopher Waller, who is under consideration to become chair of the central bank, reiterated his dovish stance on interest rates. “Because inflation is still elevated, we can take our time - there’s no rush to get down. We can steadily bring the policy rate down toward neutral,” Waller said at a CNBC forum. Attention now turns to the delayed CPI report due on Thursday, which is expected to provide further insight into how price pressures are evolving. Meanwhile, mixed economic data including stronger-than-expected nonfarm payrolls alongside higher unemployment, did little to shift market expectations, with investors still pricing in at least one Federal Reserve rate cut next year.

Dollar Edges Up, CPI Awaited

The South African rand traded around 16.7 per USD, the highest since mid-August 2022, supported by higher prices of precious metals, particularly gold. Meanwhile, traders continued to assess domestic economic data. South Africa's inflation rate surprisingly softened to 3.5% in November from 3.6% in October, moving closer to the SARB's new 3% target and strengthening the case for a rate cut next month.

South African Rand at 2022-Highs

The Indonesian rupiah firmed to around IDR 16,680 per dollar on Wednesday afternoon, rebounding from an intraday low near 16,710 after the central bank kept its benchmark rate unchanged at 4.75% for a third straight meeting, in line with market expectations. Governor Perry Warjiyo said the move was aimed at preserving currency stability and strengthening policy transmission. The board has lowered rates by a cumulative 150bps between September 2024 and September 2025 to support growth, but Warjiyo reiterated that the central bank will continue to assess the scope for further easing as inflation is expected to stay within the 1.5%–3.5% target next year, contingent on recovery efforts following a major disaster in Sumatra. Globally, the dollar index edged up to 98.5 but remained near a two-month low, as mixed U.S. labor data left Fed policy expectations little changed.

Rupiah Strengthens After BI Stays Put for Third Time

The British pound fell sharply to around $1.33 after UK inflation data came in well below expectations, reinforcing market bets that the Bank of England will deliver an interest rate cut on Thursday. Annual inflation slowed to 3.2% in November, undershooting forecasts of 3.5% and the central bank’s own projection of 3.4%. Earlier in the week, labour market data showed the unemployment rate rising to its highest level since 2021, while wage growth eased, albeit by less than anticipated. Meanwhile, GDP figures released last week indicated that the UK economy contracted for a second consecutive month in October. Against this backdrop, the Bank of England is widely expected to resume its easing cycle and cut the Bank Rate by 25bps to 3.75%, its lowest level since 2022, after keeping rates unchanged in September and November. Markets continue to price in the possibility of one or two additional rate cuts next year.

Pound Weakens After Lower-than-Expected Inflation

The Indian rupee appreciated to around 90.5 per dollar, rebounding from record lows, as the central bank stepped in to support the currency. State-run banks sold dollars aggressively on behalf of the Reserve Bank of India, triggering a sharp intraday recovery after the rupee briefly slipped past the 91 level. The central bank’s swift action, similar to forceful interventions seen in recent months, was aimed at breaking the rupee’s one-way decline. The move followed heavy recent losses driven by portfolio outflows and persistent dollar demand that left the currency looking overstretched. The rupee has dropped more than 6% this year, making it one of the worst-performing emerging market currencies, as steep US tariffs weighed on trade and investment flows. The currency is still expected to remain under pressure until there is progress in US trade negotiations. India’s trade secretary said that the country is engaging with the US to see if a deal can be reached “sooner than later.”

Rupee Rebounds as RBI Intervenes

The offshore yuan slipped to around 7.04 per dollar on Wednesday, retreating from a fourteen-month high reached in the previous session, dragged down by a weaker-than-expected official fixing. The People’s Bank of China set the yuan’s midpoint rate at 7.0573 per dollar, its firmest level since October 2024 but 187 pips weaker than Reuters’ estimate. These weaker fixings have been persistent since late November, highlighting the central bank’s efforts to rein in overly rapid currency appreciation. However, the yuan’s decline was partly cushioned by a softer greenback, as recent labor market data kept investors wary about the timing of the Federal Reserve’s next interest rate cut. Market participants are now looking ahead to China’s one-year and five-year loan prime rate decisions due later this week. Attention is also on the Standing Committee of the 14th National People’s Congress, which is scheduled to convene its 19th session in Beijing from December 22 to 27.

Offshore Yuan Retreats on Weak Fixing

The Indonesian rupiah weakened toward IDR 16,700 per dollar on Wednesday, retreating from 16,600 in the prior session as investors turned cautious ahead of Bank Indonesia’s policy decision later today. The central bank is widely expected to keep its benchmark rate unchanged at 4.75% for a third straight meeting during its final meeting of the year, though officials continue to signal scope for further easing after 150bps of cuts over the past year. Governor Perry Warjiyo stressed the need to bolster economic growth, which he says remains below potential, with Q3 GDP rising 5.04% yoy, down from 5.12% in Q2 on weaker private consumption. Warjiyo also noted depositor demand for higher returns has slowed lending rate reductions, limiting monetary transmission. At the same time, credit demand remains soft, with loan growth at a three-month low in October. Externally, the dollar index held above 98, near two-month lows, as mixed labor data left Fed policy expectations relatively unchanged.

Rupiah Slips Ahead of Bank Indonesia Policy Decision

The New Zealand dollar edged up to $0.578 on Wednesday, hovering near a two-month high, as investors awaited third-quarter GDP data due on Thursday for fresh clues on the Reserve Bank's policy outlook. The economy is expected to grow by 0.9% after contracting by 0.9% in the second quarter, potentially signaling a pickup in activity. Earlier this week, RBNZ Governor Anna Breman said the cash rate is likely to remain on hold for some time if economic conditions evolve as expected, while noting that financial market conditions have tightened in recent weeks. Her comments prompted investors to scale back expectations for rate hikes next year. Market pricing now suggests rates will stay on hold until the second half of next year, with a move by July priced at a 50% probability and September at 90%. Externally, the kiwi gained support from a weak US dollar, as a mixed jobs report left the timing of the Federal Reserve’s next rate cut uncertain.

New Zealand Dollar Edges Up Ahead of GDP Data

The Australian dollar was largely unchanged around $0.662, halting its recent losses, as the latest government budget update did little to shift the central bank’s policy outlook. The deficit for 2025/26 is now expected to be slightly narrower at A$36.8 billion, supported by stronger-than-anticipated tax revenues, with no adjustments to planned bond issuance. With spending left largely unchanged, investors are betting the Reserve Bank of Australia may need to lift its 3.6% cash rate by June to rein in inflation. Analysts at CBA and NAB now see a February hike as likely, while Westpac cautions that a rate move remains premature. Key inflation data, November’s monthly figures and the December quarterly report, will provide further guidance, with a quarterly trimmed mean increase above 0.8% potentially prompting action at the February 3 meeting. Elsewhere, the US dollar remained under pressure after soft labor market data clouded the outlook for the Federal Reserve’s next policy moves.

Australian Dollar Little Changed

The Japanese yen strengthened to around 154.6 per dollar on Wednesday, hovering at one-month highs as robust economic data reinforced expectations for a Bank of Japan interest rate hike this week. Exports rose 6.1% in November, surpassing forecasts of 4.8% and marking the strongest growth in nine months. Core machinery orders, a key leading indicator of capital expenditure over the next six to nine months, also jumped 7%, defying expectations of a 2.3% decline. The BOJ is widely expected to raise its policy rate by 25 basis points to 0.75% on Friday, with investors focusing on Governor Kazuo Ueda’s post-meeting comments for guidance on next year’s policy trajectory amid speculation that rates could reach 1% by July. However, concerns over Japan’s worsening fiscal position, fueled by Prime Minister Sanae Takaichi’s spending plan, limited further gains in the yen.

Yen Firms Up on Strong Economic Data

The dollar index steadied above 98 on Wednesday, but stayed close to its lowest levels in more than two months, as mixed labor market data did little to shift expectations for Federal Reserve policy. The delayed jobs report showed payrolls increased more than forecast in November, but October figures were revised sharply lower and the unemployment rate rose to 4.6%, the highest since 2021. Markets are pricing in roughly a 75% probability that the Fed will hold interest rates steady at its January meeting, largely unchanged from before the data release. Investors are now looking ahead to remarks from Federal Reserve officials Christopher Waller and John Williams later on Wednesday, as well as the closely watched November consumer inflation report due on Thursday, for further policy guidance. Attention will also turn to monetary policy decisions from other major central banks this week, including the Bank of Japan, the Bank of England, and the European Central Bank.

Dollar on Defensive After Mixed Jobs Report

The Argentine peso weakened past 1,450 per US dollar, nearing record lows as the central bank’s decision to link the FX trading band to inflation effectively accelerated the pace of depreciation and reset expectations toward a weaker nominal path. By replacing the pre-set 1% monthly crawl with adjustments tied to monthly inflation running near 2.5%, policymakers formally sanctioned faster peso losses, prompting corporates and households to bring forward dollar demand and increase hedging activity. At the same time, plans to rebuild depleted reserves through gradual dollar purchases while expanding the monetary base toward 4.8% of GDP reduced the Bank’s near term capacity to lean against currency pressure, particularly in a shallow FX market. These policy shifts collided with a fragile external position, sizable near term debt service requirements, and still limited reserve buffers, intensifying pressure at the upper end of the trading band.

Argentinean Peso Slumps After FX Band Reset

The Mexican peso strengthened past 18 per US dollar, reaching July 2024 highs amid broad US dollar weakness, while Mexico’s policy outlook remained relatively restrictive. Softer US labour signals, including slower job creation and a rising unemployment rate, alongside cooling consumption indicators have pushed markets to price a higher probability of additional Federal Reserve easing in 2026, eroding dollar support. In contrast, Mexico’s November inflation surprised to the upside with headline near 3.8% and core reaccelerating into the mid 4s, reinforcing Banxico’s cautious, meeting by meeting approach after earlier cuts. That divergence keeps Mexican real rates attractive relative to expected US levels, sustaining carry oriented inflows and supporting the peso’s rebound.

Mexican Peso Appreciates Further

The Brazilian real weakened toward 5.45 per US dollar, sliding to near two-month lows as renewed political uncertainty overshadowed otherwise supportive monetary signals. While Copom’s minutes reinforced a vigilant stance, flagged upside inflation risks and kept the Selic at 15% for longer, markets focused on the political risk premium resurfacing ahead of the 2026 election cycle. The release of new polling and lingering uncertainty around opposition cohesion revived doubts over fiscal discipline and the durability of restrictive policy, limiting the currency’s response to hawkish guidance. That reassessment coincided with a broader risk-off tone, as equities fell, oil prices dropped sharply and US yields remained elevated, raising the opportunity cost of holding reais.

Brazilian Real Weakens Amid Election Fears

The British pound climbed above $1.34, its strongest level since early October, continuing to benefit from broad US dollar weakness as traders looked ahead to the Bank of England’s monetary policy decision later in the week. The central bank is widely expected to cut the key bank rate by 25 basis points to 3.75%, bringing it to the lowest level since 2022, as rising unemployment and the UK’s stagnating economy ease inflationary pressures. Fresh economic data due ahead of the central bank’s decision, will help shape the monetary outlook for 2026. Labour market data showed the unemployment rate reached the highest since 2021 and wage growth slowed although less than expected. Inflation is also due before the monetary decision. Market participants continue to price in the possibility of one or two further rate cuts next year.

British Pound Strengthens

The Canadian dollar appreciated toward 1.37 per US dollar, testing its highest levels since July as investors weighed firm domestic fundamentals against a broad softening in the US policy outlook. Inflation data showing headline CPI steady at 2.2% and the trimmed mean easing to a ten month low of 2.8% reinforced confidence that price pressures are converging toward the BoC’s target without forcing an abrupt policy shift. In that context, the Bank of Canada’s decision to hold rates at 2.25% and its view that policy is about the right level tempered expectations for aggressive near term easing. An improving external backdrop, with trade flows tracking a surplus, added further support. In contrast, the US dollar weakened as delayed labor and consumption data pointed to a cooling economy, with unemployment rising to 4.6% and retail sales stalling, prompting markets to price a higher probability of additional Fed cuts in 2026.

Canadian Dollar Tests July Highs

The euro climbed to $1.178, its strongest level since early October, bolstered by broad dollar weakness, as mixed US data reinforced the view that Fed can continue with interest rate cuts. Nonfarm payrolls rose by 64K in November, beating expectations, while an October estimate showed a 105K decline and the jobless rate climbed to 4.6%, its highest level since September 2021. Meanwhile, investors pared back expectations for additional ECB easing after officials signaled that further cuts may not be necessary in 2026. President Christine Lagarde indicated that the central bank will raise Eurozone growth projections next week, as the economy shows resilience amid ongoing trade tensions. In France, political risks eased slightly after the National Assembly narrowly approved next year’s social-security bill, providing a temporary boost to Sébastien Lecornu’s minority government as attention now turns to the uncertain passage of the broader state budget.

Euro Rises Further After NFP's

The dollar index slipped below 98.1 on Tuesday, touching its lowest level in more than two months, as traders continued to bet that the Federal Reserve has room to cut the fed funds rate again next year. The delayed economic data did little to change investor expectations for up to two additional rate cuts in 2026. The jobs report showed the US economy added 64K jobs in November, above the 50K forecast, while the unemployment rate unexpectedly rose to 4.6%, its highest level since 2021, signaling a cooling labour market. Meanwhile, retail sales were flat overall, weighed down by declines at auto dealers and gasoline stations, although spending remained firmer across several other categories. The dollar weakened primarily against the British pound and the Japanese yen, and also edged lower versus the euro. The ECB is expected to keep rates unchanged this week while the BoE is widely anticipated to cut borrowing costs by 25 bps, and the BoJ is set to raise interest rates.

Dollar Declines to Over 2-Month Lows

The Indian rupee weakened past the 91 per USD threshold on Tuesday, extending its run of record lows for a fourth straight session, pressured by hedging activity and ongoing foreign outflows amid stalled US-India trade talks. The currency has dropped more than 6% this year, making it one of the worst-performing emerging market currencies, as steep US tariffs weigh on trade and investment flows. Overseas investors have sold over $18 billion of local equities in 2025, heading toward the largest annual outflows on record. While state-run banks intervened with dollar sales to ease pressure from maturing NDF positions, analysts say the rupee is unlikely to recover until there is progress in trade negotiations. India’s trade secretary said on Monday that the country is engaging with the US to see if a deal can be reached “sooner than later.” Meanwhile, a rebound in exports in November has eased pressure, with shipments to the US rising and the trade deficit narrowing to a five-month low.

Indian Rupee Slips Past 91 Level

The Indonesian rupiah slipped toward IDR 16,690 per dollar on Tuesday, extending losses from the prior session as Bank Indonesia kicked off its two-day policy meeting. Markets widely expect the central bank to hold key rates for a third straight meeting, but officials have maintained a dovish bias after delivering a total 150bps cut since September 2024. Governor Perry Warjiyo said any further easing would depend on domestic and global conditions, noting that domestic inflation will stay within BI’s target range through 2026. While liquidity in the banking system remains ample, weak credit demand, evidenced by loan growth easing to 7.36% in October from 7.7% a month earlier, reinforced bets that policy support may be needed if growth fails to accelerate, weighing on the rupiah. The currency has fallen about 3.7% this year, placing it among the weakest performers in Asia. Globally, the dollar index hovered near two-month lows ahead of the delayed U.S. jobs report and November CPI data.

Rupiah Extends Drop as Policy Meeting Begins

The offshore yuan strengthened to around 7.04 per dollar, reaching a fresh fifteen-month high amid growing calls for a stronger currency to support economic rebalancing. The move comes as a rare public debate gains traction in China, with economists and former policymakers arguing the yuan remains too weak relative to fundamentals and that modest appreciation could help shift growth away from exports and toward domestic demand. While authorities continue to stress currency stability, softer recent data, highlighting fragile consumption, weak investment, and a deepening property downturn, has added pressure on policymakers and reinforced expectations for further policy support, alongside forecasts for gradual gains in the yuan over the year ahead. Elsewhere, a weaker US dollar added further support amid caution over upcoming key economic data delayed by the government shutdown.

Offshore Yuan Hits Fresh 15-Month Peak

The Australian dollar depreciated past $0.662 per US dollar, marking its fourth consecutive session of losses as investors weighed weak economic data. The Westpac-Melbourne Institute Consumer Sentiment Index slumped by 9% month-on-month in December 2025, sliding back below the 100 mark after briefly returning to positive territory in the previous month. Inflation emerged as the primary concern, with Westpac noting that consumer price index readings have exceeded expectations for roughly four consecutive months. This persistent price pressure has contributed to heightened caution among consumers regarding interest rates, particularly after the Reserve Bank of Australia indicated last week that it is likely done cutting rates. Meanwhile, flash data showed the Composite PMI dipping to a seven-month low of 51.1 in December. Growth in the services sector slowed to 51 from 52.8, while manufacturing activity showed modest improvement, rising to 52.2 from 51.6.

Australian Dollar Falls on Weak Data

The dollar index hovered around 98.3 on Tuesday, remaining near two-month lows as investors positioned ahead of the combined October and November jobs report, which was delayed by the government shutdown. Retail sales data and preliminary manufacturing indicators are also due later today, while the November consumer price index will be released on Thursday. The upcoming labor market data is expected to provide fresh insight into employment conditions in recent months and could influence expectations for Federal Reserve monetary policy next year. Markets are currently pricing in a 75.6% probability that the Fed will keep rates unchanged at its January meeting. Traders also weighed declining odds that Kevin Hassett could replace Powell, following reports that President Trump’s advisers are instead backing candidates perceived as more independent. Elsewhere, investors are preparing for a series of policy decisions from other major central banks this week, including the BOJ, BOE and ECB.

Dollar Pressured Ahead of Payrolls Report

USDTRY increased to an all-time high of 42.71. Over the past 4 weeks, US Dollar Turkish Lira gained 1.01%, and in the last 12 months, it increased 22.02%.

Turkish Lira Hits All-time Low

The Canadian dollar strengthened past 1.38 per US dollar to a three-month high as markets weighed a steady Bank of Canada against a softer US policy outlook. Headline CPI holding at 2.2% and the trimmed-mean easing to a ten-month low of 2.8%, reinforcing the view that price pressures are converging toward the BoC’s target without forcing an abrupt policy pivot. Against that backdrop, the Bank of Canada’s decision to hold rates at 2.25% and its assessment that policy is “about the right level” curbed expectations for aggressive near-term easing, stabilizing Canadian rate differentials and supporting CAD demand. In contrast, while the US Fed formally projected only one additional cut next year, Chair Powell’s remarks on whether to pause or cut “a little” or “more than a little” were interpreted as leaving the door open to further easing, prompting markets to lift the probability of two or more cuts in 2026 to over 50% and narrowing US Canada yield spreads in favor of the loonie.

Canadian Dollar at 3-Month High

The British pound traded little changed near $1.34, continuing to benefit from broad US dollar weakness as traders prepared for the Bank of England’s monetary policy decision later in the week. The central bank is widely expected to cut the key bank rate by 25 basis points to 3.75%, bringing it to the lowest level since 2022, as rising unemployment and the UK’s stagnating economy ease inflationary pressures. However, fresh economic data, due ahead of the central bank’s decision, will help shape the monetary outlook for 2026, including reports on wage growth and inflation, both of which are expected to have slowed. Market participants continue to price in the possibility of one or two further rate cuts next year, with expectations likely to be influenced by these upcoming data releases.

British Pound Little Changed at $1.34

The Canadian Dollar touched 1.38 against the USD, the highest since September 2025. Over the past 4 weeks, US Dollar Canadian Dollar lost 2.14%, and in the last 12 months, it decreased 3.42%.

Canadian Dollar Hits 12-week High

The Indonesian rupiah weakened toward IDR 16,660 per dollar on Monday after firming around IDR 16,620 in the prior session, weighed by modest foreign capital outflows in the second week of December and growing caution ahead of Bank Indonesia’s final policy decision of the year later this week. While the central bank is expected to keep interest rates unchanged for a third meeting, policymakers have recently signaled room for more easing to support economic growth, following a total 150bps of rate cuts over the past year. Still, further downside was capped by signs of improving domestic demand, with retail sales for November expected to rise and consumer mood showing improvement during the month. On the external front, the US dollar index held losses, as markets stayed cautious ahead of key U.S. economic data releases delayed by the government shutdown, alongside lingering uncertainty over Fed leadership risks heading into next year.

Rupiah Eases Slightly

The Indian rupee slid past 90.6 per dollar, continuing to set fresh record lows, pressured by the absence of a trade deal with the US amid prolonged negotiations and persistent foreign outflows from local equities and bonds. The currency has fallen 5.5% this year, making it Asia’s worst performer, hurt by steep US tariffs that have weighed on exports and dampened investor interest in local markets. Overseas investors have offloaded more than $18 billion in stocks so far in 2025, with over $500 million in bond sales in December alone. Investor sentiment has also been weighed down by remarks suggesting a US trade agreement is unlikely before March, while talks with the EU also appear stalled. Meanwhile, November's inflation edged up to 0.71%, still well below the RBI’s 2% lower threshold, leaving room for potential rate cuts in 2026. Market focus now turns to India’s November trade data, expected to show a $32 billion goods deficit, down from a record high of $41 billion in October.

Rupee Continues Record Decline

USDINR increased to an all-time high of 90.78. Over the past 4 weeks, US Dollar Indian Rupee gained 2.41%, and in the last 12 months, it increased 6.94%.

Indian Rupee Hits All-time Low

The offshore yuan appreciated to around 7.05 per dollar, hitting its highest level since late September last year despite a raft of disappointing economic data. November figures showed momentum cooling, with retail sales growth slowing sharply and falling well short of forecasts, underscoring persistent weakness in consumption. Industrial output also eased slightly from the previous month and missed expectations, while fixed-asset investment contracted more than anticipated, marking its deepest downturn since the pandemic period. The prolonged property slump remained a major drag, with real estate investment falling at a faster pace and home price declines intensifying across major cities. However, economists said the deterioration in investment and housing conditions reinforced expectations for additional fiscal and monetary support early next year. Elsewhere, the yuan found support from a weaker US dollar, after the Fed cut rates and signaled a less hawkish path than anticipated.

Yuan Hits 15-Month High Despite Weak Data

The New Zealand dollar fell to around $0.578, retreating from a more than two-month high, after the Reserve Bank signaled it is likely to keep the official cash rate unchanged for some time. Governor Anna Breman said this outlook assumes economic conditions evolve as expected. She added that the forward path published in the November Monetary Policy Statement still indicates a slight probability of another rate cut in the near term, while noting that financial conditions have tightened more than projected. This dampened expectations for a rate hike, which markets had been pricing in from the third quarter next year. Breman said the economy is broadly tracking the RBNZ’s expectations and inflation is on course to reach the 2% target by mid-2026. Losses were somewhat limited by ongoing softness in the US dollar after the Federal Reserve signaled a less hawkish path than markets had anticipated.

New Zealand Dollar Retreats

The South Korean won weakened to around 1,477 per dollar on Monday, marking its lowest level in over eight months amid persistent capital outflows, prompting authorities to signal intervention. The finance ministry and Bank of Korea convened an emergency inter-agency meeting over the weekend to discuss measures amid recent swings, while the Financial Services Commission vowed “bold, preemptive actions” if required. Market participants continue to price in elevated risk as the won remains at psychologically sensitive levels, prompting concerns over potential spillovers to bond and equity markets. Meanwhile, South Korean equities opened sharply lower, with the KOSPI falling 2.1% in early trade as heavyweight tech shares, including Samsung Electronics and SK hynix, retreated following renewed US AI-sector caution. The equity selloff added pressure on the won, as foreign investors adjusted positions and hedged currency exposure.

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