US Dollar Retreats as Markets Sprint Toward the Fed’s Rate Decision

Dollar Dips Back After Turbo‑charged Rally

After a splash‑y lift thanks to a Republican win and a wave of Trump‑fuelled optimism, the U.S. dollar decided it was time for a quick nap.

Now investors in the market are all eyes on the Fed’s next move, wondering whether to cut rates or keep them steady as the political climate adds a dash of uncertainty.

Why the Fed Matters (and Why It’s Harder to Cut Rates)

High public spending could spark inflation, nudging Treasury yields higher and giving the Fed less wiggle room to loosen rates.
The Republican hold on the House adds a twist—no guarantees on how much future spending will actually happen.
Talk about Santa: people are waiting for the Fed to drop a 25‑basis‑point Christmas gift to the market.

What’s Happening With Yields?

Short‑term yields are bumping up, signalling caution. In contrast, longer‑dated yields are cooling off because the market’s got a “hold my beer” attitude—remaining patient until we know the Fed’s next big decision.