Investing.com – The U.S. dollar edged marginally higher Thursday, consolidating after recent volatility, while the euro continued to show softness as the situation in eastern Europe becomes more fraught. 

At 05:10 ET (10:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 106.690, adding to the previous session’s gains and remaining near last week’s one-year high. 

Dollar consolidates near highs 

The dollar may have slipped slightly Thursday, but remains in demand as relations between Russia and the West remain extremely fraught, as Ukraine used both US and UK missiles to strike deep into Russian territory.

The US currency has also been buoyed by Donald Trump’s victory in the presidential election, with traders digesting policies aimed at big fiscal spending, higher tariffs and tighter immigration, measures that could foster inflation and potentially slow Federal Reserve easing.

“The DXY is holding gains and it is not hard to see why. US rates are being repriced modestly higher as the market shifts away from pricing a December Fed rate cut,” analysts at ING said, in a note. “Just 8bp of easing is now priced.”

There are data later in the session for investors to digest, while several Federal Reserve officials are also set to speak in the coming days. 

Euro heads further lower

In Europe, traded 0.3% lower to 1.0516, after slipping 0.5% on Wednesday, back toward last week’s low of $1.0496, its weakest against the dollar since Oct. 2023.

“EUR/USD looks to have been buffeted by events in Ukraine this week,” ING noted. “The war is going through a period of escalation as both sides seek to gain ground ahead of potential ceasefire discussions early next year. That the Biden administration is providing more support before year-end warns of a more aggressive Russian response – a development which is weighing on European currencies.”

Also weighing is the weak economic climate in Europe, coupled with the potential for a trade war with the new Trump-led US administration.

“The balance of risks on growth and inflation is … shifting to the downside, and possible US tariffs are not expected to alter significantly the inflation outlook in Europe,” ECB policymaker Francois Villeroy de Galhau said earlier Thursday in a speech in Tokyo.

fell 0.2% to 1.2630, after data released earlier Thursday showed that Britain borrowed more than expected in October.

In October alone, stood at £17.4 billion, the Office for National Statistics said, the second-biggest October borrowing total since records began in 1993.

Yen gains on Ueda’s comments

fell 0.7% to 154.38, with the Japanese yen receiving a boost after Bank of Japan Governor Kazuo Ueda said the central bank will “seriously” take into account foreign exchange-rate moves in compiling its economic and price forecasts.

He noted that there is still a month to go until the BOJ’s next policy meeting in December, adding that there will be more information to digest by then.

dropped 0.1% to 7.2415, but the yuan remained close to near four-month lows, pressured by the potential for trade headwinds from a Trump presidency. 

Investing.com– Most Asian currencies nursed losses on Thursday, while the dollar remained close to one-year highs amid growing doubts over whether the Federal Reserve will cut interest rates in December. 

Speculation over expansionary policies under a Donald Trump presidency was a key boost to the dollar in recent weeks, as was sticky inflation data for October, along with less dovish signals from the Fed.

Sentiment in Asia was also quashed by uncertainty over more Chinese stimulus measures, while broader risk appetite waned in the face of heightened tensions between Russia and Ukraine. 

Dollar near 1-yr high as traders pare bets on Dec rate cut 

The and steadied in Asian trade after a strong overnight session. 

The greenback was buoyed by increased caution over future interest rate cuts by the Fed. Traders were seen pricing in a 53.3% chance for a 25 basis point cut in December, much lower than the 85.7% chance seen a day ago, showed.

Traders also ramped up bets that the Fed will hold to 46.7% from 14.3% last week.

The shift in expectations came after Fed Chair Jerome Powell said last week that resilience in the U.S. economy gave the central bank more time to consider future rate cuts. His comments were also preceded by data showing sticky inflation in October. 

Trump’s election win had also underpinned the dollar since early-November, with the president-elect expected to enact more inflationary policies, given his protectionist stance towards trade and immigration. 

U.S. data is due this week and is set to provide more cues on the world’s largest economy. data is also due later on Thursday, while several Fed officials are set to speak in the coming days.

Asia FX weak as rate jitters weigh 

Asian currencies were pressured by the prospect of relatively higher U.S. interest rates, as well potential trade headwinds from a Trump presidency. 

The Chinese yuan was among the worst hit by these concerns, given that Trump has vowed to impose steep import tariffs on the country. The yuan’s pair moved little on Thursday, and was close to near four-month highs. 

Underwhelming signals on Chinese stimulus also pressured the yuan.

The Japanese yen firmed slightly on Thursday, but was also nursing steep losses against the dollar through October and November. The pair fell 0.3% after crossing the 155 yen level this week.

The Australian dollar’s pair rose 0.2% after hitting a near four-month low last week. The South Korean won’s pair was flat, as was the Singapore dollar’s pair.

The Indian rupee’s pair rose 0.1% and was close to record highs of around 84.6 rupees, hit earlier in November. 

PMI readings from several major Asian economies, including Japan, China, Australia and India are due in the coming days, offering up more cues on business activity in the region. 

Japanese is also on tap this Friday.

By Chuck Mikolajczak

NEW YORK (Reuters) -The U.S. dollar rose on Wednesday, renewing its post-election rally after a three-session decline as investors looked for more insight on the Federal Reserve’s interest rate plans and U.S. President-elect Donald Trump’s proposed policies. 

Safe-haven currencies such as the Japanese yen, Swiss franc and the greenback saw a brief boost on Tuesday before fading. Russia’s foreign minister Sergei Lavrov said that country would “do everything possible” to avoid nuclear war, hours after an announcement by Moscow to lower its threshold for a nuclear strike provided them with a bid.  

Even with the recent pause, the has rallied about 3% since the U.S. election on growing expectations the Fed may slow its path of interest-rate cuts on concerns Trump’s policies could reignite inflation.

“There’s a lot of pessimism about Fed rate cuts that we think (is) misplaced,” said Jay Hatfield, CEO at Infrastructure Capital Advisors in New York.

“The rest of the world, except for Japan, has to cut because they have zero growth, basically, and without the U.S. they’d be in a recession. So then the big variable is the U.S. Everybody is super-bearish, in our opinion too bearish, about Fed cuts.”

The dollar index, which measures the greenback against a basket of currencies, rose 0.52% to 106.65, with the euro down 0.5% at $1.0542.

Expectations for the path of rate cuts have been scaled back, while volatile, in recent weeks. Markets are pricing in a 52% chance of a 25-basis-point cut at the Fed’s December meeting, down from 82.5% a week ago, according to CME’s FedWatch Tool.

A Reuters poll showed most economists expect the Fed to cut rates at its December meeting, with shallower cuts in 2025 than expected a month ago due to the risk of higher inflation from Trump’s policies. Recent comments from Fed officials, including Chair Jerome Powell, have pointed to the central bank being slow and measured in its rate-cut path.

On Wednesday, Fed governors Michelle Bowman and Lisa Cook laid out competing visions of where U.S. monetary policy may be heading, with one citing ongoing concerns about inflation and another expressing confidence that price pressures will continue to ease.

Against the Japanese yen, the dollar strengthened 0.43% to 155.31.

The dollar had strengthened as much as 9% against the yen since the beginning of October to as much as 156.74, rising above the 156 mark last week for the first time since July and sparking the possibility Japanese authorities may again take steps to shore up the currency.

Investors are waiting for Trump to name a Treasury secretary, one of the highest-profile cabinet posts overseeing the country’s financial and economic policy. Some of Trump’s other picks have generated questions about their qualifications and experience.

The recent yen weakness to a three-month low has lifted expectations the Bank of Japan was likely to make a hawkish shift as the currency approaches levels that prompted an intervention in July.

Comments this week from BoJ Governor Kazuo Ueda did not offer fresh signals on the central bank’s leanings. 

Sterling weakened 0.27% to $1.248. The pound had initially moved higher as data showed British inflation jumped more than expected last month to rise back above the Bank of England’s 2% target, and underlying price growth also gathered speed.

The rise in inflation supported cautiousness by the BoE on interest-rate cuts. Traders see an 82.8% chance the central bank will hold rates steady at its policy meeting next month.

In cryptocurrencies, bitcoin gained 1.81% to $93,912.00 as it broke through the $94,000 mark for the first time to a high of $94,982.37. was buoyed by hopes Trump will create a friendlier regulatory environment and a report the president-elect’s social media company was in talks to buy crypto trading firm Bakkt.