As we head into December, financial markets are anything but calm. Volatility is creeping higher, and stress signals are flashing across asset classes. From delayed US economic data to wild swings in Fed rate expectations, investors are navigating a foggy landscape where risk appetite feels fragile.
Markets won’t wait. Neither should you. Download our Global FX Outlook for December to uncover outlooks for key currency pairs and actionable strategies to help your business navigate this uncertainty.
The recent end of the 43-day US government shutdown offered temporary relief, but with funding only secured through January 30, the risk of renewed disruption looms large. Equity and bond volatility gauges are climbing together, and the MSCI global stock index just posted its worst month of the past eight in a clear sign that risk aversion is spreading.
What’s happening in FX?
The US dollar has been the star performer lately, buoyed by safe-haven demand. But seasonal headwinds and the possibility of a Fed rate cut in December could temper that strength, creating room for selective rebounds among major peers. Here’s a quick snapshot:
- USD: The dollar index hit a six-month high in November, but its trajectory hinges on the Fed’s next move.
- EUR: Down nearly 4% from 2025 highs, yet still above its year-to-date average. Options markets hint at rising volatility.
- GBP: The pound slid to a two-year low versus the euro, reflecting persistent UK macro and political challenges.
- AUD: The Aussie has dropped for two straight months, pressured by fragile risk sentiment and global uncertainty.
Key themes to monitor in December
Will the Fed cut again?
After the longest US government shutdown in history, delayed data releases have muddied the waters. Investors are questioning whether the Fed will deliver a third consecutive cut at its December meeting. Inflation remains above target, and the economy—while softer—is still resilient. Expect more market swings as this debate unfolds.
Peace hopes and FX impact
Signs of progress in Russia-Ukraine talks could lift sentiment. If momentum builds, CEE currencies may benefit, the euro could get a boost from lower oil prices, and the dollar might lose some of its safe-haven shine.
AI hype under scrutiny
Despite strong earnings from Nvidia, concerns about frothy valuations tied to AI remain. With economic clarity lacking, safe-haven assets could stay in favor until confidence returns.
Get ahead with the Global FX Outlook for December
Will the Fed’s December meeting or the upcoming U.S. payrolls report reignite FX volatility, or are we heading into the new year on calm waters? For businesses engaged in cross-border trade, understanding these dynamics is critical for planning and risk management.
Download our comprehensive Global FX Outlook for December to access detailed analysis, currency forecasts, and strategies that help you navigate uncertainty and optimize your international payments.
