The US dollar continued its upward trajectory, bolstered by safe-haven flows as geopolitical tensions between Ukraine and Russia show no signs of abating. Both sides appear to be maneuvering for political leverage, with the potential for negotiations under the Trump administration adding another layer of complexity.
Federal Reserve Bank of Chicago President Austan Goolsbee struck a dovish tone, signaling that interest rates could move “a fair bit lower.” Goolsbee expressed optimism that inflation is gradually aligning with the Fed’s target, reinforcing expectations of a measured easing cycle in the months ahead.
Despite the dollar’s modest performance on Friday, concerns about China’s economic trajectory persist. Lingering structural challenges have kept sentiment muted, but favorable valuations in emerging markets, particularly in Asia, are beginning to draw investor interest. Recovery efforts are underpinned by hopes that recent government stimulus in China will translate into tangible improvements in corporate earnings.
Meanwhile, US exceptionalism continues to dominate the macroeconomic landscape, driven by elevated bond yields and anticipation of pro-growth policies under the Trump administration. This dynamic has provided strong support for US assets, though investors remain cautious as they navigate a complex interplay of global risks and policy signals.
As markets digest these developments, the focus will remain on central bank commentary, geopolitical updates, and potential fiscal policy shifts that could set the tone for the final weeks of the year.