Hedge into Christmas

Market reports
Thanim Islam
  • USD continues to be favoured as rate cut bets continue to ease
  • EUR weakens further on additional rate cut expectations

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USD continued to make gains yesterday, despite treasury yields falling further on the back of the lower-than-expected JOLTS job openings number. However ISM reported better-than-expected activity in the services sector, as well as a higher-than-expected number on the prices paid, suggesting inflationary pressures still exist. Fed rate cut expectations remain unchanged still, suggesting that markets have perhaps peaked in this expectation. Services numbers from Europe and the UK also came in higher than expected. The EUR continued to weaken as markets continue to favour more rate cuts from the ECB.


Market rates

* Daily move - against G10 rates at 7:30am, 06.12.23

** Indicative rates - interbank rates at 7:30am, 06.12.23

Data points


None today.

Chart of the day

Following a disastrous November for the USD on the back of Fed rate cut bets, its seems that participants in the market have been making the most of this weakness, (where we saw GBPUSD and EURUSD hit two-month highs) as data show the biggest turnover in currency swaps and forward contracts in over three months for USD. So it seems that the recent narrative of markets pushing Fed rate cut bets to extremes is causing markets to hedge their USD needs.

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