DXY: Dollar Index on Pace for 3rd Straight Losing Week as Rate Prospects Dent Demand

The shifting narrative is now phasing the dollar out of investor sight as markets are eager to get first signs of rate cuts.

• The dollar index DXY slipped under 102.50 this week, poised to wrap up its third consecutive week of declines. Shifting interest-rate prospects have turned investors against the buck as markets look elsewhere for bargains. The dollar index has erased roughly 3.5% of its peak 2023 valuation of 107.36 to trade near 103.30 today.
• Currency traders appear too optimistic on interest rates now that inflation has come down significantly. With consumer prices easing to 3.2% in October, and the Fed’s preferred inflation gauge, PCE, coming in at an expected 3.5% on Thursday, rumors run rampant that interest rates could use a trim.
• But the Federal Reserve has given no indications of a potential rate cut any time soon. With that said, the US central bank is expected to hold the benchmark rate at 5.25% to 5.50% at its Dec. 12 – Dec. 13 meeting. Only then will investors get more insight into the projected rate-movement timeline.