The US Dollar has slightly weakened after previous gains as the markets await the Federal Open Market Committee (FOMC) decision. Most global bond yields have decreased following a recent increase, while stocks show a mixed but hopeful outlook. The Australian Dollar (AUD), New Zealand Dollar (NZD), and Swedish Krona (SEK) remain strong but are limited within recent ranges. The market is pricing in a possible 1/4 point rate cut by the Federal Reserve but is looking for more information from the FOMC. Changes in language, updated forecasts, and remarks from Chair Powell are expected to have a significant impact.

Recent US Economic Data

Recent US data has provided insights into the job market, with September and October JOLTS figures showing a slight decline in job openings. The November NFIB Small Business Optimism Index increased to 99, up from 98.3 in October. This shows a small rise in hiring intentions and a significant increase in plans for price hikes, complicating efforts to manage inflation. President Trump has emphasized the need for immediate rate cuts for his preferred candidate for Fed chair. As of December 9, 2025, the US Dollar is easing as we await the important FOMC decision tomorrow. The market’s mood is cautiously optimistic, with bond yields decreasing after a recent rise. This optimism follows a lengthy period of high interest rates throughout 2024 and most of 2025. The market has fully factored in a 25-basis-point rate cut, marking the first loosening of policy since the aggressive hikes of 2022-2023. This expectation is supported by the November Consumer Price Index (CPI) report, which showed core inflation easing to 2.8%, approaching the Fed’s target. Therefore, the actual cut is less significant than the Fed’s guidance for the future.

Traders Focus and Market Strategies

Traders should concentrate on the tone of the press conference and the updated economic projections. We will keep an eye on the “dot plot” to understand if this is seen as a one-time adjustment or the beginning of a longer easing cycle. A dovish signal could further weaken the dollar, making long positions in pairs like AUD/USD appealing, potentially pushing it toward resistance levels last seen in early 2024. The argument for a rate cut is strengthened by a cooling labor market, contrasting sharply with the conditions a few years ago. Recent JOLTS data shows job openings declining to around 6.5 million, down from over 9 million in 2023. This slowdown eases fears of wage-driven inflation, giving the Fed more flexibility. However, we must be cautious about a hawkish surprise that could unsettle the markets. Recent business sentiment surveys, including the latest Philly Fed manufacturing index, indicated a surprising rise in the prices paid component, suggesting lingering inflation pressures. Traders should consider hedging long-risk positions with options, like buying short-dated call options on the VIX or put options on major stock indices. Create your live VT Markets account and start trading now.

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