- Aussie dips after GDP miss
- Dollar/yen steadies at 155.70 with rate hike eyed
- US expected to cut rates next week
SINGAPORE, Dec 3 (Reuters) - The dollar was becalmed on Wednesday, though investors looking ahead to 2026 were starting to position for U.S. rate cuts to weigh on the greenback while bitcoin recouped some of its losses and hovered near a two-week high.
A sharp rebound for bitcoin helped investors get somewhat in the mood for taking on a bit more risk. The biggest cryptocurrency by market value rose 2% on Wednesday to a two-week high of $93,633.70 after a 6% rise in the previous session.
Bitcoin had slumped at the start of December after a woeful November when it fell more than $18,000 as a record amount of money rushed out of the market, its largest dollar loss since May 2021, when a number of cryptocurrencies collapsed.
Tony Sycamore, market analyst at IG, said as long as bitcoin holds above the $80,537 level, supported by the lows hit in April during tariff uncertainty, "we look for another leg higher towards the $95,000 to $100,000 range, at which point we would shift to a more neutral bias in bitcoin."
EURO SHINES AMID DOLLAR WEAKNESS
The euro cleared its 50-day moving average after euro zone inflation came in very slightly above expectations on Tuesday, and it last bought $1.1640, up 0.12% on the day ahead of a slew of manufacturing data from Europe.
The single currency is up over 12% this year, on pace for its biggest annual gain since 2017, benefiting from a weak dollar due to tariff uncertainties earlier in the year and lately rising odds of U.S. rate cuts.
The European Central Bank is due to meet in two weeks and is broadly expected to stand pat on rates, with markets pricing in only a one-in-four chance of any easing next year.
The ECB cut rates by a combined 2 percentage points in the year to June but has been on the sidelines ever since. That should leave the euro supported especially with traders pricing in 90 basis points of U.S. rate cuts before the end of 2026.
AUSSIE GAINS, RUPEE SINKS
In Asia, the Australian dollar hit its highest level since October 30 at $0.6584 after gross domestic product data was slightly below expectations. The Reserve Bank of Australia is due to meet next week and is expected to hold rates steady.
The other main action in Asia was in India where the rupee breached the closely watched 90 per U.S. dollar threshold, pressured by weak trade and portfolio flows despite strong economic growth in the world's fifth-largest economy.
The Japanese yen was steady at 155.70 per dollar, with bets firming on an interest rate hike this month, in contrast with the U.S. where a cut is 85% priced in for the Federal Reserve's meeting next week.
Sterling inched higher to $1.3235, while the safe-haven Swiss franc was steady at 0.8017 per dollar. The New Zealand dollar hovered at $0.5753.
Investors are also weighing the prospect of White House economic adviser Kevin Hassett being nominated as Fed chair leading to some investors turning bearish on the dollar.
Hassett, a former Fed senior economist, is deemed close to U.S. President Donald Trump's administration and in favour of a faster reduction in U.S. interest rates. Trump said he would be announcing his pick as Fed chair early in 2026.
Deutsche Bank strategist Tim Baker this week said there is scope for a roughly 2% drop in the dollar through December, a month where the currency has tended to fall for a decade.
The dollar index , which measures the U.S. currency against six other units, was 0.1% lower at 99.202, set for a nearly 9% decline in the year.
Analysts at Singapore's OCBC also see a weaker dollar into 2026 as U.S. cuts narrow a rate gap with the rest of the world.
"The thesis is pretty simple," said Spectra Markets President Brent Donnelly.
"The market is long dollars with a run-it-hot Fed Chair coming, an already bad fiscal situation, high nominal rates that are about to fall, a seasonal tendency for USD weakness, and interest rate differentials at the wides.
"I am going long EUR/USD and NZD/USD."
Reporting by Tom Westbrook and Ankur Banerjee; Editing by Sam Holmes
Source: Reuters