The U.S. dollar stabilized in early December trading, a period typically marked by weaker performance for the currency. With a lack of U.S. economic data and Federal Reserve officials in a quiet period, G-10 currencies traded within narrow ranges.
The Bloomberg Dollar Spot Index showed little change in New York afternoon trading after recording a modest gain on Monday.
Shaun Osborne, chief FX strategist at Scotiabank, noted on Tuesday that the dollar's potential for further rebounds appears limited due to "Fed policy expectations/attention to potential leadership changes/seasonal trends." Strategists remain cautious on the dollar's December outlook, warning of a potential "triple threat."
Historical data dating back to 1995 shows the dollar index has averaged a decline of about 0.9% in December.
The yen headed for its first drop in four sessions as the impact of Bank of Japan Governor Kazuo Ueda's remarks about a potential December rate hike faded. USD/JPY rose 0.3% to 155.91, paring some of its earlier gains.
EUR/USD edged up less than 0.1% to 1.1616 after six consecutive days of gains. EUR/GBP climbed 0.1% to 0.8797, marking its fourth straight advance.
The Bank of England warned of growing risks tied to fixed-income hedge fund strategies involving basis trades. Meanwhile, a slight uptick in eurozone inflation supported the European Central Bank's view that there is little immediate justification for further rate cuts.
The Canadian dollar and Australian dollar outperformed among G-10 currencies. USD/CAD fell 0.2% to 1.3977, while AUD/USD gained 0.3% to 0.6561.
ANZ no longer expects the Reserve Bank of Australia to deliver a final rate cut in the first half of 2026.
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