Softer Dollar
December 22, 2025
(160) The dollar fell overnight by 0.6% against the Australian and New Zealand currencies, 0.5% versus sterling, and 0.3% relative to the yen, euro, Swiss franc and Canadian dollar. With the yearend holidays now at hand, the U.S. currency has settled into the cadence of its initial years after floating in 1973 when it fell against the German mark during the second half of December in every year except 1984 from 1974 through 1987.
The ten-year Japanese JGB yield jumped six basis points to 2.07%, while 10-year sovereign debt yields edged up two basis points in the United States and Italy and by a basis point each in Germany, Great Britain, France and Spain.
Prices for Bitcoin and gold have rocketed 1.7% and 1.6% higher, the latter to another record peak above $4,450 per ounce.
Equity markets in the Pacific Rim closed up 2.1% in South Korea, 1.8% in Japan, 1.6% in Taiwan, 0.9% in Singapore and Australia, 0.8% in India and 0.7% in China but are fractionally lower so far in the largest economies of Europe. While the DOW is flat, the Nasdaq, SPX and Russell 2000 show pre-open advances of 0.4-0.7% in futures trading.
While more Federal Reserve interest rates appear in play during 2026, rate cut expectations from the People’s Bank of China have lessened. For a seventh straight monthly review, monetary officials left the 7-day repo rate, 1-year Loan Prime Rate and 5-year LPR unchanged at 1.4%, 3.0% and 3.5%.
In decisions announced late last week, central banks in Jamaica and Colombia likewise left their key interest rates unchanged. The Bank of Jamaica’s rate has been at 5.75% since a 25-basis point cut in May, which was preceded by a percentage point of easing during the second half of 2024. The agreement by monetary officials at the Central Bank of Colombia was reached by the narrowest of margins, with four votes to keep a 9.25% rate level outweighing two votes for a cut of 50 basis points and a third dissenter that preferred a rate reduction of 25 basis points. Colombian CPI inflation has exceeded 5.0% in each of the last four reported months through November’s 5.3% reading versus a target of 3% give-or-take one percentage point. Being an adjacent neighbor to Venezuela, tensions with the United States are an extra reason for thinking twice before loosening Colombian monetary policy.
British GDP growth last quarter of 0.1% versus 2Q and 1.3% relative to the third quarter of 2024 was left unrevised. The past summer was a difficult one for manufacturing, but activity in both services and construction recorded positive changes.
Malaysian consumer price inflation, which crested in 2022 at 4.7%, ticked up a tenth of a percentage point to 2-month high of 1.4% in November. Consumer price inflation in Hong Kong stayed at October’s 4-month high of 1.2%.
Lebanese consumer price inflation, which spiked as high as 269% in April 2023, retreated 1.4 percentage points from October’s 10-month high to 14.7% in November.
Icelandic CPI inflation ended 2025 at an 11-month highs of 4.5% overall and 4.7% on a core basis, excluding volatile items.
Irish wholesale price inflation of -5.3% was its most deflationary in 28 months and eight percentage points lower than at end-2024.
Canadian producer price inflation of 6.1% last month was almost five times greater than the 2025 low of 1.3% last May and the most elevated reading since 7.5% at the end of 2022.
Italian PPI inflation of -0.2% in November represented a one-year low. Finnish PPI inflation matched October’s 4-month high of 0.2%. Estonian PPI inflation near doubled to a 6-month high of 1.1% in November from 0.6% in October, having swung earlier from +6.1% in February to -2.2% in July.
Britain’s GBP 12.1 billion current account deficit in the third quarter, smallest in 11 quarters, turned out to be considerably less than analysts were predicting and just 1.6% of GDP, down from deficits equal to 2.8% of GDP in the prior quarter and 2.2% of GDP in calendar 2024.
Hong Kong’s current account surplus last quarter of HKD 98.2 billion was 13.25% narrower than a year earlier.
Copyright 2025, Larry Greenberg. All rights reserved.
Tags: Bank of Jamaica, British GDP and current account, Canadian PPI, Central Bank of Colombia
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