Asian currency markets largely held their ground on Friday, November 29, 2025, as global traders digested mounting expectations of a U.S. Federal Reserve rate cut at the central bank’s upcoming December 9–10 meeting. This calm in the region’s foreign exchange scene belied a week of shifting sentiment, with the U.S. Dollar Index remaining muted during Asian trading hours but still heading for a notable weekly loss, according to Reuters. The market’s focus, however, extended far beyond the numbers, zeroing in on the evolving Federal Reserve leadership race and its potential to reshape monetary policy at home and abroad.
Driving this week’s market mood was a dramatic swing in the perceived likelihood of a Fed rate cut. Just a week earlier, traders had pegged the odds of a 25-basis-point reduction at the December meeting at around 40%. By Friday morning, that probability had jumped to nearly 87%, as tracked by CME’s FedWatch tool and reported by Reuters. The catalyst? A combination of softer U.S. economic data and a chorus of dovish-leaning commentary from some Federal Reserve officials, which together fueled speculation that the central bank may be preparing to loosen policy sooner than expected.
Yet, uncertainty continues to hover over the markets. Data releases have been sparse, and policymakers remain divided in their public messages. According to ING analysts, the lack of clarity has left traders parsing every economic indicator and official statement for clues about the Fed’s next move. "Market uncertainty remains due to mixed messages from Fed officials and upcoming U.S. economic data releases," Reuters noted, underscoring the fragile mood as the year draws to a close.
Adding another layer of intrigue is the ongoing speculation about who will helm the Fed after Jerome Powell’s term ends in May. Kevin Hassett, the White House economic adviser and a former Fed senior economist, has emerged as the frontrunner, with his odds on betting site Polymarket rising 18 points to 53% as of November 26, 2025. Other contenders include former Fed Governor Kevin Warsh, Fed Governor Christopher Waller, Vice Chair for Supervision Michelle Bowman, and BlackRock executive Rick Rieder, according to Reuters.
Hassett’s candidacy has sparked debate both on Wall Street and among global investors. He is widely perceived as dovish on rates, and many expect that his leadership would tilt the Fed toward earlier monetary easing and pro-growth measures—trends that typically weigh on the dollar. "Hassett is seen as dovish on interest rates and his appointment could weaken the dollar over time," Reuters reported. Mike Riddell, lead portfolio manager for Fidelity International’s Strategic Bond strategies, told Reuters, "The possibility of Hassett being nominated Fed chair puts rate cuts back on the table and is bearish for the dollar."
Despite these concerns, markets have so far remained composed. Short-term U.S. bond yields initially dipped after news of Hassett’s rising odds, but soon rebounded. The dollar and Fed funds futures barely reacted, with traders pricing in an 83% probability of a quarter-point rate cut in December, as noted by Reuters. Some on Wall Street are hopeful that Hassett’s traditional economics background will keep Fed policy grounded, even if he is more aggressive about rate cuts than Powell.
The question of Federal Reserve independence has also come to the fore. Hassett is known to be close to President Donald Trump’s administration, which favors faster interest rate reductions. This proximity has prompted some to worry about the central bank’s autonomy, especially after Trump’s attempt earlier this year to fire Governor Lisa Cook—a move that was temporarily blocked by the U.S. Supreme Court, according to Reuters. Yet, many market participants remain unconcerned. Art Hogan, chief market strategist at B. Riley Wealth, told Reuters, "I think the market understands this, that the chairman doesn’t decide rates. The chairman guides a committee and 12 people get to vote. As much as you’d like to think that a very dovish Fed chair might move monetary policy easier over the course of his tenure, it just doesn’t work that way."
This sentiment is echoed by others in the investment community. Tom Graff, chief investment officer at Facet, remarked, "Wall Street is going to be of two minds on Kevin Hassett, should he wind up as Fed Chair. He will be viewed as less independent compared to either past Fed chairs, or for that matter a candidate like Christopher Waller. This creates some risk to the dollar as well as risks to a steeper Treasury yield curve." Still, Graff added that Hassett’s traditional economics background may ultimately keep policy on a steady course.
Meanwhile, the Federal Reserve has already eased rates by 0.25% at each of its meetings in September and October 2025, leaving the Fed funds rate at 3.75% to 4.00%. The debate over the future path of interest rates is set to intensify ahead of the December policy meeting, with the outcome likely hinging on fresh U.S. economic data and the evolving stance of Fed officials.
Across Asia, the impact of these developments was felt but not dramatically so. Currency movements were limited, with the South Korean won edging 0.2% higher against the dollar, the Singapore dollar holding steady, the Indian rupee gaining 0.1%, and the Malaysian ringgit remaining stable as of November 29, 2025. China’s onshore yuan and the Australian dollar both showed little change, reflecting the region’s cautious optimism and reluctance to make bold moves ahead of the Fed’s decision, according to Reuters.
In Japan, however, the story was a bit different. Investors there focused heavily on Tokyo’s inflation indicators, which once again exceeded the Bank of Japan’s (BOJ) 2% target. Core inflation in the capital has remained in the high-2% range, reinforcing expectations that the BOJ may consider another rate hike soon. Stronger-than-expected industrial output and retail sales have added to confidence that Japan’s economy may withstand higher rates, bolstering the yen even as it dipped 0.1% against the dollar. ING analysts told Reuters that sustained inflation above target and robust economic readings “bolster the likelihood of a BOJ rate hike in December.”
As the end of 2025 approaches, global markets are bracing for a pivotal moment. With the Federal Reserve’s leadership potentially changing hands and monetary policy at a crossroads, investors around the world are watching every signal, every data release, and every word from central bankers. The stakes are high, and the decisions made in the coming weeks will ripple far beyond the trading floors of New York and Tokyo.
