2025-12-17 22:03:00
The U.S. dollar experienced choppy trading on Wednesday, ultimately emerging as the best performing major currency despite an intraday journey that saw session-to-session shifts in direction and momentum.
During the Asian session, the dollar traded net higher against the major currencies, and with no direct economic news to point to, it’s likely rising geopolitical tensions between the U.S. and Venezuela may have pushed some capital flow into the Greenback for safety.
The London session brought the day’s most significant economic catalyst from the currency space. The dollar traded choppy and mostly sideways as traders likely shifted their focus to the UK inflation report. The softer-than-expected readings sparked a sharp decline in sterling as traders increased Bank of England rate cut expectations, with the next full 25 basis point reduction now priced for April 2026 versus July 2026 prior to the data.
Germany’s Ifo business climate index also disappointed during the London session, falling to 87.6 versus 88.5 expected, adding to the dovish European backdrop but generating limited immediate dollar reaction. Euro area final CPI confirmed the preliminary 2.1% reading with wage growth also coming in softer than forecast at 3.0% versus 3.2% expected.
The U.S. session opened with the dollar initially trading net lower against the major currencies, possibly reflecting pre-positioning ahead of Fed Governor Christopher Waller’s scheduled appearance. Waller’s comments around 13:30 GMT provided a measured dovish tone, stating that monetary policy settings are up to 100 basis points above neutral and expressing support for gradually bringing rates down as inflation eases. However, he emphasized “there’s no rush” given inflation remains elevated. The dollar rebounded ahead of the London close and stabilized for the rest of the session, possibly due to broad risk aversion sentiment as equities and risk assets fell on artificial intelligence infrastructure spending and valuation concerns.
At the Wednesday close, the dollar posted net gains against most major currencies, with its strongest performance coming against the Japanese yen and Australian dollar. The dollar’s resilience during the US session despite Waller’s rate cut support suggested that relative growth concerns in other regions and broad market risk aversion likely provided underlying support for the greenback.
Upcoming Potential Catalysts on the Economic Calendar
- Australia Consumer Inflation Expectations for December 2025 at 12:00 am GMT
- Swiss Balance of Trade for November 2025 at 7:00 am GMT
- France Business Confidence for December 2025 at 7:45 am GMT
- Euro area ECB Buch Speech at 10:00 am GMT
- Canada CFIB Business Barometer for December 2025 at 12:00 pm GMT
- Bank of England Official Bank Rate for December 18, 2025 at 12:00 pm GMT
- European Central Bank Interest Rate Decision for December 18, 2025 at 1:15 pm GMT
- Canada Average Weekly Earnings for October 2025 at 1:30 pm GMT
- U.S. Consumer Price Index Growth Rate for November 2025
- U.S. Initial Jobless Claims for December 13, 2025 at 1:30 pm GMT
- Philadelphia Fed Manufacturing Index for December 2025 at 1:30 pm GMT
- Euro area ECB Press Conference at 1:45 pm GMT
- U.S. Leading Index for November 2025
- Kansas Fed Manufacturing Index for December 2025 at 4:00 pm GMT
Thursday’s calendar presents elevated volatility potential with simultaneous monetary policy decisions from the Bank of England and European Central Bank. Following Wednesday’s softer-than-expected UK inflation data, markets are pricing increased odds of a BoE rate cut with potentially quicker follow-up cuts in 2026. The ECB decision arrives amid ongoing eurozone growth concerns and wage moderation, with traders watching for signals on whether or not future easing is still in the cards.
During the US session, weekly initial jobless claims and the November CPI report could spark additional volatility, though data quality concerns stemming from the recent government shutdown may limit market reactions. The ECB press conference at 1:45 pm GMT will be closely monitored for commentary on growth risks and the inflation outlook following Wednesday’s softer wage growth data.
Stay frosty out there, forex friends, and don’t forget to check out our Forex Correlation Calculator when planning to take on risk!
