Dollar faces crunch week for US rates, yen holds gains
SYDNEY - The dollar started in a cautious mood on Monday in what is shaping up to be a critical week for the prospect of U.S. rate cuts, while the yen's recent rebound was underpinned by wagers on rising rates at home.
"The wage and inflation picture continues to support further rate hikes, though whether the BOJ moves in December or January remains a close call," he added. "But the bar for a further shift in expected interest rates in favour of the U.S. in the near term is quite high," he added."A period of consolidation into year-end looks to us like the most likely scenario, although the risks remain skewed in favour of the dollar over the course of 2025."
Markets imply a 65% chance of such an easing, though they also only have two more cuts priced in for all of 2025. Political uncertainty is another drag for the single currency as investors wait to see if France's government can survive the week intact.
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