The USD maintained a downward trend in the trading session on Tuesday, after data showed that the production activities of the world's largest economy weakened more than expected, increasing pressure for the US Federal Reserve (Fed) to soon lower interest rates at the upcoming policy meeting.
The USD Index - a measure of the strength of the greenback against a basket of six major currencies - decreased slightly to 99.408 points when opening the Asian session. The index has previously had a streak of 7 consecutive sessions of decline, reaching a two-week low in the first trading session of the week in the US, when stocks and bonds simultaneously adjusted.
According to data released on December 2, the US manufacturing sector continued to shrink for the ninth consecutive month in November. The Purchasing Managers' Index (PMI) released by the Institute for Supply Management (ISM) fell to 48.2 points, down from 48.7 in October and below 50 points - showing weakening activity.
Component indexes for new orders and employment have all decreased, while input costs have increased due to the prolonged impact of import tariffs.
All of these signs show that demand in the US economy is slowing, said Brian Martin, Head of G3 Economics at ANZ Bank ( London).
He said: "The Fed needs to cut interest rates, not only in December but also in the coming year." Mr. Martin forecasts another 50 basis points for interest rate cuts in 2026.
According to CME Group's FedWatch tool, the market is currently pricing in an 88% probability of the possibility of the Fed cutting 25 basis points at its policy meeting on December 10, compared to 63% a month ago.
The yield on the 10-year US Treasury note rose to 4.086%, following a strong sell-off in the global bond market in the first trading session of the week.
In the currency market, the USD is trading at 155.51 yen, almost unchanged compared to the end of the trading session in the US. Previously, Bank of Japan (BOJ) Governor Kazuo Ueda said the agency would consider the "advantages and disadvantages" of raising interest rates at the upcoming meeting. This statement caused the 2-year Japanese bond yield to surpass the 1% mark for the first time since 2008.
The Euro remains stable around $1.1610, stable in the Asian trading session, as negotiations to end the war in Ukraine continue. European leaders have shown support for Ukrainian President Volodymyr Zelenskiy, after a previous US-backed peace proposal was viewed as leaning towards Russia. Meanwhile, the US special missionary has departed for Moscow to continue discussions with the Kremlin.
The British pound is trading at 1.3216 USD, near a one-month high but has few fluctuations on the day. The notable event is that the head of the UK Treasury Authority (O BR) has just resigned after the agency accidentally revealed important details in the national budget plan, before Finance Minister Rachel Reeves officially announced it to the National Assembly.
In the Atlantic region, the Australian dollar stood at 0.6544 USD, while the New Zealand dollar was at 0.5727 USD, both of which moved sideways at the beginning of the Asian trading session.
