Dollar Weakness Persists Amid Mixed U.S. Data and Rate-Cut Speculation

Key Takeaways:

• The dollar index remains under pressure as rate-cut expectations continue to weigh.

• US ISM Manufacturing PMI and Prices miss forecasts, signaling ongoing industrial weakness.

• Market eyes potential new Fed chair and upcoming economic data, including ADP employment and PCE inflation.

• Gold surges to six-week highs amid weaker dollar and heightened rate-cut speculation.

Market Summary:

The U.S. dollar index, which tracks the greenback against a basket of six major currencies, continued to drift lower as market participants absorbed a string of underwhelming data and persistent speculation over Federal Reserve easing. ISM Manufacturing data added to the bearish sentiment, with the PMI declining to 48.2 in November from 48.7 previously, missing expectations of 49.0. ISM Manufacturing Prices also came in softer than forecast at 58.5 versus the 59.5 estimate, highlighting ongoing cost pressures and slower factory activity amid import tariff drag.

Beyond data, speculation over a potential new Fed chair has added to market uncertainty. White House economic adviser Kevin Hassett signaled willingness to serve if appointed, while Treasury Secretary Scott Bessent suggested a new chair could be named before Christmas. Investors are weighing the possibility that leadership changes could tilt the FOMC toward more dovish policy, reinforcing expectations of further rate cuts.

Attention now turns to key upcoming releases, including November ADP employment figures on Wednesday and the delayed September PCE Index, the Feds preferred measure of inflation, on Friday. These releases could provide a clearer picture of the U.S. economic trajectory and influence near-term dollar movements.

Meanwhile, gold prices have rallied to a six-week high, buoyed by a softer dollar and expectations of Fed easing. The greenbacks retreat has made the metal more attractive for holders of other currencies, supporting safe-haven demand as markets remain cautious amid lingering economic uncertainties.