Singapore, Dec 17, 2025 – The U.S. dollar inched away from its lowest level since the start of October on Wednesday after data showed the labour market remained soft, leaving investors on edge about when the next rate cut from the Federal Reserve is likely to come.
The euro was 0.14% weaker at $1.173, but stayed close to the 12-week high it touched in the previous session ahead of the policy decision from the European Central Bank on Thursday, where the central bank is expected to hold rates steady.
The dollar index, which measures the U.S. currency against six rivals, rose 0.18% to 98.394, still not far from the lowest level since October 3 which it hit on Tuesday. The index is down about 9.5% this year, on track for its steepest annual decline since 2017.
While the U.S. economy added 64,000 jobs in November, surpassing an estimate from economists polled by Reuters, the unemployment rate was at 4.6% last month, although the 43-day government shutdown distorted the data.
Still, markets and analysts were unsure if the report had changed the policy outlook much and awaited the inflation report due on Thursday.
“The severe distortion in the jobs numbers makes them virtually unactionable for January, it would be extremely difficult for the Fed to calibrate policy on such a poor signal/noise ratio,” said Kieran Williams, head of Asia FX at InTouch Capital Markets.
Williams said policymakers will need the cleaner data of the first quarter to “validate the speed of deterioration which does indicate around March or April being the prudent baseline for any potential resumption of cuts.”
The Fed cut rates as expected last week, but signalled borrowing costs are unlikely to drop further in the near term, projecting just one more rate cut in 2026. But markets are pricing in two rate cuts next year, although a January move is unlikely.
“If CPI comes in as expected later this week, then the Fed will definitely not be feeling pressure to ease at the next few meetings,” said Thomas Mathews, head of markets for Asia-Pacific at Capital Economics. “Even March may be a bit too soon to expect a cut.”
