Dollar set for worst week since July as traders maintain bets on December rate cut

By Ozan Ergenay

LONDON (Reuters) -The U.S. dollar (DX=F) was heading for its worst play show since precocious July connected Friday arsenic investors progressively number connected further monetary easing successful December by the Federal Reserve, portion Thursday's U.S. vacation ​thinned liquidity.

An outage owed to a cooling contented astatine CME Group's CyrusOne information centres halted commercialized connected its widely-used currency level and ‌in banal and commodity futures, though trading began to resume astatine 1200 GMT.

"We are not expecting immoderate important interaction connected the market, possibly it is thing to support an oculus connected ‌just successful case, but we are going to person a reasonably quiescent extremity to the period and the week," said Lee Hardman, elder currency expert Global Markets Division for EMEA astatine MUFG.

The dollar index, which measures the greenback's spot against a handbasket of six large peers, was past trading up 0.2% astatine 99.744, recovering immoderate ground. But 5 days of declines inactive permission it acceptable for its biggest one-week nonaccomplishment since July 21.

U.S. Fed funds futures are ⁠pricing an implied 87% probability of a 25-basis-‌point chopped astatine the Federal Reserve's adjacent argumentation gathering connected December 10, compared to a 39% accidental a week earlier, the CME Group's FedWatch instrumentality showed.

The probability priced successful by futures had been rising since New York Fed president ‍John Williams said past week that the U.S. cardinal slope could inactive chopped involvement rates "in the adjacent term" without putting its ostentation extremity astatine risk.

The remarks "give america much assurance that they volition chopped rates, arsenic we person seen successful the FX marketplace since then, which has, astatine slightest temporarily, enactment a dampener connected the ​dollar's uptrend," Hardman said.

In Asia, the Japanese yen fluctuated aft a play of decline.

It was past level astatine 156.2 yen to ‌the dollar arsenic labour marketplace and ostentation information firmed up the lawsuit for monetary tightening successful Asia's second-biggest economy, against a backdrop of persistent weakness successful the currency that has raised the imaginable of involution from the Ministry of Finance.

Consumer prices successful Japan roseate 2.8% year-on-year successful November, somewhat faster than economists had expected and supra the Bank of Japan's 2% target.

"The yen has benignant of stabilised astatine weaker levels this week, it has reduced unit connected Japan to measurement successful and enactment the currency," Hardman said.

Hardman said the Japanese government's comments past week came arsenic a awesome that if ⁠the yen continues to weaken, past the BOJ would bring guardant plans to resume complaint hikes.​

EURO AND STERLING SET FOR BEST WEEK IN OVER THREE MONTHS

Elsewhere, the euro was past down ​0.3% astatine $1.1558 connected the dollar, but inactive up astir 0.5% for the week and acceptable for its biggest play summation since July, amid talks connected a U.S.-backed program to extremity the Russia-Ukraine war.