By Alden Bentley

NEW YORK (Reuters) -The dollar fell broadly on Wednesday in thin pre-holiday trade, digesting a slew of indicators that underscored U.S. economic resilience while investors assessed the risk that President-elect Donald Trump will start a tariff war no one will win.

The decline further unwound the dollar’s recent rally. Few traders were interested in building or holding positions before a long Thanksgiving weekend for many of them that dovetails with month end. Markets are closed Thursday and exchanges close early on Friday.

Moreover, revised data showing gross domestic product rose at a 2.8% rate in the third quarter, as expected and the same as last month’s first estimate, did not much bolster the case for the Federal Reserve to ease again next month, although traders still leaned that way, lifting odds a bit to 67%.

Neither did consumer spending data that showed progress on lowering inflation appears to have stalled in recent months while the economy retained much of its solid growth momentum early in the fourth quarter.

“We all expected that inflation would pop up a little bit, but inflation is not getting out of hand. And that’s the key,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“This paves the way for a 25 basis point cut in December and then probably a pause. But the pause won’t likely be due to inflation data, but because of uncertainties over Trump’s tariffs. I think the Fed will grow cautious.”

The Commerce Department’s personal consumption expenditures price index climbed 0.2% in October, matching September’s unrevised gain. In the 12 months through October, the PCE price index increased 2.3% after advancing 2.1% in September.

While October durable goods orders rose a smaller-than-expected 0.2%, applications for unemployment benefits at 213,000 were a bit lower than last week’s upwardly revised 215,000 jobless claims, indicating a solid labor market.

Dollar/yen fell to its lowest in about five weeks, and was down 1.43% at 150.91 as trading wound down. The weakening dollar lifted the euro 0.74% to $1.0564. The euro/dollar pair hit its highest in a week, while the , which measures the greenback against a basket of currencies including the yen and the euro, fell to its lowest since Nov. 13 and in afternoon trade was off 0.74% at 106.06. That put it down 1.9% from a two year high hit on Friday.

“Today may be a bit more about some profit taking, at least for the U.S. for a long weekend. “It’s had, like I said, a phenomenal run here and still remains very, very robust,” said Amo Sahota, executive directors of Klarity FX in San Francisco.

Trump’s vows on Monday of big tariffs on Canada, Mexico and China, the United States’ three largest trading partners, knocked their currencies lower and have left investors jittery.

Some analysts argued that inflation risks from tariffs and proposed tax cuts could prevent Trump from ushering in more disruptive measures.

“The recent sharp dollar appreciation largely decreases the asset values in dollars outside U.S. and hence increases the rebalancing need to sell the dollar at the month-end,” said Sheryl Dong, forex strategist at Barclays (LON:).

The outperforming yen has benefited from bets for a December rate hike in Japan, and position adjustments.

The dollar’s sell-off accelerated on Wednesday after the pair fell below the 200-day moving average at 151.99.

“That I would deem that as being fairly significant in today’s marketplace as well, just technically,” Sahota said.

Analysts noted that there was some relief that the country is not in the firing line of Trump’s possible tariffs.

“Japan has a strong hand in dealing with U.S. trade concerns,” said Jane Foley, senior forex strategist at RaboBank.

It “is the U.S.’s largest overseas holder of U.S. Treasuries and the largest provider of foreign direct investment into the U.S.,” she added.

A ceasefire between Israel and Iran-backed group Hezbollah came into effect on Wednesday under a deal that aims to end hostilities across the Israeli-Lebanese border. While not a big factor on Wednesday, the wars in the Middle East and Ukraine have been a support for the dollar as a safe haven.

Against its Canadian counterpart, the greenback slipped 0.18% to C$1.4027 , after touching a 4-1/2-year high of $1.4177 on Tuesday.

The dollar was little changed against the Mexican peso near Tuesday’s top that was its highest against since July 2022, fetching 20.622 pesos.

Sterling strengthened 0.81% to $1.267, the Australian dollar strengthened 0.34% to US$0.6494 and the strengthened 1.06% to US$0.5896.

The steadied after drooping on Tuesday’s tariff news. The dollar was 0.15% lower at 7.245 per dollar.

In cryptocurrencies, bitcoin was up 5.19% at $96,414, digesting its run up to almost $100,000 last week.

Investing.com — The US dollar may experience a temporary pullback in December as a wave of central bank meetings unfolds, according to Citi analysts. 

Nine of ten G10 central banks are set to meet over the next three weeks, with five—including the Federal Reserve, European Central Bank (ECB), Bank of Japan (BoJ), Bank of Canada (BoC), and Swiss National Bank (SNB)—expected to announce rate adjustments, explained Citi. 

They highlight that market expectations currently align with a more hawkish Fed and more dovish stances from the ECB, BoJ, and SNB. However, Citi’s FX Strategy team anticipates a different outcome. 

“Should markets reprice—and central banks deliver—in line with our expectations, we would expect that could lead to a slightly lower USD,” the analysts stated.

Data from the US and Canada will play a critical role in shaping market sentiment, particularly labor market data due on Friday, December 6, says Citi. 

For the ECB, BoJ, and SNB, Citi sees less immediate risk for significant market surprises, but expects increasing convergence in market expectations as their meetings approach.

In the near term, the dollar’s performance may shift toward relative rate dynamics rather than being heavily influenced by US policy developments. 

Citi notes the potential for a ” squeeze” if central bank actions align with their forecasts, which they state “only looks more likely as we look at the broader central bank landscape in the coming weeks.”

Despite the expected short-term USD dip, Citi remains strategically bullish on the dollar for the first half of 2025. 

“We would like to use any USD dips in December to build longs for H1 2025,” the analysts concluded, underscoring their confidence in the dollar’s broader strength heading into the new year.

By Gleb Bryanski and Alexander Marrow

MOSCOW (Reuters) -Russia’s central bank said on Wednesday it would stop foreign currency purchases in order to ease pressure on the financial markets after the rouble weakened beyond 110 to the U.S. dollar, down by one-third since early August.

The central bank said it had decided not to buy foreign currency on the domestic market from Nov. 28 until the end of the year, but to defer these purchases until 2025.

“The decision was made to reduce the volatility of financial markets,” the regulator said in a statement. Since Russia was blocked from using the dollar and euro, it has made foreign exchange interventions using .

Russia published new economic data on Wednesday highlighting the latest signs of overheating in an economy retooled for the purpose of fighting the war in Ukraine, which has sucked workers out of the labour force.

Real wages were up 8.4% in September in year-on-year terms, unemployment hit a record low 2.3% in October, and weekly inflation stands at almost 0.4%, all despite a benchmark interest rate of 21%.

By 1600 GMT, the rouble was down 7.25% since the start of Wednesday’s trade at 113.15 to the dollar, according to LSEG data – further fuelling inflation, which is running at around 8% a year.

It fell beyond 15 to the yuan, also the lowest level since March 2022, just after Russia’s invasion of Ukraine.

Under Russia’s budget rule, the finance ministry sells foreign currency from its rainy-day National Wealth Fund to make up for any shortfall in revenue from oil and gas exports, or makes purchases in the event of a surplus.

The ministry’s forex transactions are carried out by the central bank, which also conducts its own interventions.

The central bank said it would continue conducting its own yuan sales at the equivalent of 8.4 billion roubles a day, thereby increasing the Russian state’s net daily sales of foreign currency to the equivalent of 8.4 billion roubles from around 4.2 billion roubles.

Dmitry Pyanov, deputy CEO of Russia’s second largest lender VTB, said sanctions imposed by the United States on Russia’s third-largest lender, Gazprombank, which handles the energy trade, were behind the rouble’s sharp fall.

“My assumption is that the sanctions against Gazprombank have had a significant impact, as it has ceased to be a channel for delivering foreign currency to the Moscow Exchange,” Pyanov said.

He said the central bank should focus on stabilising the currency market, which was not functioning properly now, within the next few days.

PSB Bank analysts said the decision would “moderately support the rouble, but it will not be enough to return the exchange rate to last week’s levels”, predicting that the market would stay volatile.

ROUBLE AND SHARE PRICES BOTH FALLING STEEPLY

The rouble’s fall has been compounded by a fall of more than 20% in the stock market so far this year as investors shift their savings from stocks to deposits, which offer interest above the benchmark rate of 21%.

Economy Minister Maxim Reshetnikov said the rouble’s volatility was due to global dollar strength and market concerns following the latest sanctions, not the result of fundamental factors, predicting that it would soon stabilise.

He said 82% of Russia’s exports and 78% of its imports were paid for in roubles and “friendly”, non-Western countries’ currencies.

Analysts said another measure that the government could use is forcing exporting companies to sell more foreign currency by raising mandatory sale requirements, though not all were convinced this would work.

“If exporters are unable to make transactions [due to sanctions], the requirement from the government for them to do so will not help the situation in any way,” economist Evgeny Kogan said.

The rouble’s fall is fuelling inflation, which is set to exceed the central bank’s estimate for this year, working counter to the regulator’s painful monetary tightening, with the benchmark interest rate at its highest level since 2003.

The central bank estimates that a 10% fall in the value of the rouble adds 0.5 percentage points to inflation, implying that the fall of the last four months may be adding 1.5 percentage points to inflation.

All trade in dollars and euros moved to the over-the-counter market after Western sanctions were imposed on the Moscow Exchange (MOEX). As a result, the trade has become volatile and opaque, with most banks disclosing data only to the regulators.