Daily Market View 05-12-2025
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USD Continues to Flounder Whilst a New Bet Becomes Popular
USD
The Dollar is weakening once again as traders again start to ramp up bets of more Fed interest rate cuts next year with new man Kevin Hassett at the helm.
A slew of secondary importance US data releases today, factory orders, PCE inflation data, possibly lending some short term strength to USD before the Fed meeting next Wednesday and crucially, the dot plot projections, where Fed members estimate where the US base rate will be in the short, medium and long term.
Beyond the data and Fed, the purchasing of long volatility options is becoming quite popular in the market, despite its not so great performance over the past two decades. The bet stems again from the idea of Hassett at the Fed and a more loose fiscal attitude from economies all around the world triggering a rise in big swings.
Whether this bet will prove fruitful for traders, time will only tell, but it is clear to see how important this new potential Fed Chairman could be.
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