Fed Messaging Stays Cautious as December Cut Odds Narrow
Federal Reserve commentary leaned cautious throughout the week. Futures markets now show slightly above a 50% probability of a 25-basis-point cut in December, lower than earlier in the week. Kansas City Fed President Jeffrey Schmid emphasized that inflation remains too elevated and signaled he may oppose a cut if policymakers move in that direction next month.
Uncertainty deepened after the White House confirmed that the October unemployment rate may never be released, as the survey required to produce it was not conducted during the shutdown. Additional datasets, including CPI, PPI, and nonfarm payrolls for October, also remain in question. With these gaps, traders have relied more heavily on Fed speeches and broad sentiment rather than hard data.
Foreign Currencies React to Dollar Weakness
The euro advanced above $1.16 earlier in the week before easing slightly, while the pound slipped after reports that the U.K. government may scrap planned income-tax increases ahead of the November 26 budget.
The Swiss franc firmed as global equity weakness pushed investors toward safety, and the yen stabilized in the mid-154s despite remaining near recent lows.
Position adjustments remain heavy, with traders rotating in and out of dollar exposure based on shifting expectations for U.S. policy.
