Fed Rate Cut Bets Surge to 80%—What It Means for Your Trades

The dollar took a breather on Monday as Fed Governor Christopher Waller dropped a dovish bomb: he’s pushing for a December rate cut due to labor market concerns. The market immediately priced in an 80% probability of a 25bp cut on December 9-10, up from just 30% last Thursday—that’s the kind of flip that moves billions.

Currency moves in focus:

• DXY: Down 0.03% as dollar weakness accelerated post-Waller comments
• EUR/USD: +0.12% higher, buoyed by dollar selling and dovish Fed signals. Headwind: German Nov IFO business confidence unexpectedly dropped 0.4 points to 88.1, missing the 88.5 forecast
• USD/JPY: +0.26% on yen weakness, despite the BoJ staying hawkish (only 16% odds of a rate hike on Dec 19). Japan’s fresh 17.7 trillion-yen stimulus package is weighing on the currency

Precious metals caught a bid: Gold (+0.36% to close the December contract) and silver (+0.83%) rallied after Waller’s comments, as lower rates boost hard assets’ appeal as inflation hedges. The kicker: China’s PBOC continued its buying spree, pushing reserves to 74.09 million troy ounces in October—the 12th straight month of accumulation. Global central banks snapped up 220 MT in Q3 alone, up 28% QoQ.

The wild card: Stock market strength actually limited dollar demand, while easing Ukraine tensions reduced safe-haven flows. But persistent uncertainty over US tariffs and geopolitical risks keeps precious metals in the game. Watch ETF holdings—both gold and silver EFTs saw recent liquidation pressure after hitting 3-year highs in late October.