Asian session review: the US dollar is showing negative dynamics

During today's Asian trading, the US dollar declined against major currencies, retreating from the highest level since November 27, reached yesterday against the background of US inflation data, which confirmed consensus estimates and increased the likelihood of a Fed interest rate cut at the December meeting.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.16% to 106.54. Yesterday, the index rose by 0.29%, as data showed that CPI growth in November accelerated to 2.7% per annum, as expected, from 2.6% per annum in October. On a monthly basis, consumer prices rose 0.3% (the largest increase since April) after an increase of 0.2%. The last change was in line with forecasts. At the same time, the core CPI, which does not include food and energy prices, increased by 0.3% m/m, at the same pace as in October and in line with market expectations. Annual core inflation was 3.3%, as expected. After the publication of the data, the markets increased the chances of easing the Fed's monetary policy next week. According to the CME FedWatch Tool, markets see a 98.6% probability of a 0.25% rate cut in December (compared to 88.9% the day before), while the probability of an additional rate cut in January is 19.0%. However, these expectations may change again after today's publication of the producer price index for November. Economists expect producer prices to rise by 0.2% compared to October and by 3.2% per annum. In October, the producer price index increased by 0.2% and 3.1%, respectively. Higher-than-expected indicators may slightly reduce the chances of a Fed rate cut in December, but this should not affect the outcome of the December meeting. Markets are also pondering how President-elect Donald Trump's proposed tariff and tax cut policies, which are expected to be inflationary, could impact the Fed's outlook.

The Australian dollar rose almost 1% against the US dollar after domestic employment data beat forecasts, indicating a far more resilient labor market than many had expected. Australia's unemployment rate fell unexpectedly to 3.9% in November, an eight-month low, defying forecasts of a rise to 4.2%. Net employment increase of 35,600 in November, surpassing expectations of 25,000. Full-time jobs rose by 52,600, offsetting a 17,000 decrease in part-time positions. Annual job growth slowed slightly to 2.4%. The participation rate edged down to 67.0% from 67.1%. The robust labor data comes amid signs of economic slowdown. This resilience has tempered speculation of an imminent interest rate cut by the Reserve Bank of Australia (RBA).