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A dismal year for the U.S. dollar is ending with signs of stabilization, but many investors believe the currency’s decline will resume next year as global growth picks up and the Fed eases further. The U.S. dollar slumped more than 9% this year, against a basket of currencies, its worst showing in eight years, driven by expectations of Federal Reserve rate cuts, shrinking interest rate differentials with other major currencies, and as concerns about U.S. fiscal deficits and political uncertainty swirled. Investors broadly expect the dollar to weaken further as other major central banks stand pat or tighten policy and as a new Fed Chair takes chargea change that is expected to herald a more dovish tilt for the central bank. The dollar typically falls when the Fed cuts rates as lower U.S. interest rates make dollar-denominated assets less attractive to investors, reducing demand for the currency. “The reality is we still do have an over-valued U.S. dollar from a fundamental standpoint,” Karl Schamotta, chief market strategist at global corporate payments company Corpay, said. Getting the dollar’s trajectory right is important for investors, given the currency’s central role in global finance. A weaker dollar boosts U.S. multinational earnings by increasing the value of overseas revenues when converted back to dollars, even as it enhances the attractiveness of international markets by providing an FX boost beyond the underlying asset performance. Despite the dollar’s rebound in recent monthsthe dollar index is up 2% from its September lowFX strategists have largely maintained forecasts for a weaker dollar in 2026, a Reuters survey conducted from Nov. 28 to Dec. 3 showed. The dollar’s real broad effective exchange rateits value relative to a large basket of foreign currencies, adjusted for inflationstood at 108.7 in October, down only slightly from a record high of 115.1 in January, showing that the U.S. currency still remains overvalued, according to Bank for International Settlements data. Global growth Expectations for dollar weakness hinge on converging global growth rates with the U.S. advantage expected to narrow as other major economies gain momentum. “I think what’s different is that the rest of the world is just going to grow more next year,” said Anujeet Sareen, portfolio manager at Brandywine Global. Germany’s fiscal stimulus, China’s policy support, and improved growth trajectories in the euro zone are expected to reduce the U.S. growth premium that has supported the dollar in recent years, investors said. “When the rest of the world is starting to look better in terms of growth, that’s favorable for the dollar to continue to weaken,” Paresh Upadhyaya, director of fixed income and currency strategy at Amundi, the biggest European asset manager, said. Even investors who believe the worst of the dollar’s decline is over say any major hit to U.S. growth could weigh on the currency. “If you see any weakness at any point next year, that could probably be bad for markets, but that could definitely affect the dollar too,” said Jack Herr, investment analyst at mutual fund company GuideStone Funds, who doesn’t foresee major further dollar depreciation as his base case for 2026. Central Bank divergence Expectations for the Fed to continue cutting rates even as other major central banks hold rates or hike could also weigh on the dollar. A sharply divided Fed cut interest rates in December, with the median policymaker view for next year calling for one more quarter-of-a-percentage-point cut. With Jerome Powell set to step aside for President Trump’s next Fed chair appointment, the market may also price in a more accommodative central bank next year, given Trump’s push for lower rates. Several of the known finalists for the Chair position, including White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh and current Fed Governor Chris Waller, have advocated for interest rates to be lower than they are now. “Although the market expects limited action from the Federal Reserve next year, we believe the trend is toward lower growth and weaker employment,” Eric Merlis, co-head of global markets, Citizens in Boston, who said they are short the U.S. dollar relative to other G10 currencies. Meanwhile, traders reckon the European Central Bank will keep rates steady in 2026, though a rate hike is not completely ruled out. The ECB kept its policy rates steady at its December meeting and revised upwards some of its growth and inflation projections. Not a straight line Longer-term views for dollar weakness notwithstanding, a near-term rebound for the dollar is not to be ruled out, investors cautioned. Continued investor enthusiasm around artificial intelligence and the resulting capital flows into U.S. equities could provide near-term support for the dollar. The boost to U.S. growth stemming from the reopening of the government after this year’s shutdown and from the tax cuts passed this year, could lift the dollar in the first quarter, Brandywine’s Sareen said. “But we’re inclined to think that that’s not likely a sustained driver of the dollar for the year,” he said. Saqib Iqbal Ahmed, Reuters
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Below, Ben Swire shares five key insights from his new book, Safe Danger: An Unexpected Method for Sparking Connection, Finding Purpose, and Inspiring Innovation. Ben is a former Design Lead at the innovation firm IDEO and co-founder of Make Believe Works, a team-building company that uses creative activities to accelerate connection, deepen trust, and fuel collaboration. His methods have helped organizations, from Fortune 500 companies to public school districts, build healthy, productive workplace cultures. Whats the big idea? Most of us think of risks as a threat to our safety. But what if theyre the best way to create the kind of safety that matters mosttrust, creativity, and connection? What if safety itself doesnt come from avoiding risk, but from taking small, smart risks together? Listen to the audio version of this Book Biteread by Ben himselfbelow, or in the Next Big Idea App. 1. If youre ready to change but afraid to rock the boat, try a little Safe Danger. Most people tend to think safety and danger are opposites. But its more useful to think of them as dance partners. Safety gives us solid footing; danger gives us movement. The emotional sweet spot between the twowhere you feel safe but challenged enough to discover something newis something I call Safe Danger. I base entire team-building and community-building workshops around moments of safe danger. In that zone, you can take small, meaningful riskslike sharing a half-baked idea or owning up to an embarrassing shortcomingin ways that build trust, empathy, and connection. The trick to making Safe Danger effective is not to ask a lot. This is not about big confessions or life changes, but rather asking enough to make future risks feel less intimidating. For example, I might base an activity around the person who inspired you to become who you are today. Or about a hard-earned life lesson. These ask you to risk sharing some personal details of your story, but are not so private as to be intrusive or uncomfortable. These are manageable risks. The trick to making Safe Danger effective is not to ask a lot. Every time you take a small risk and it goes well, your nervous system updates its prediction: Its safe to be a little braver here. Thats why Safe Danger works. It rewires fear into trust, step by step. And trust is contagious. When one person shares a personal story or asks an uncomfortable question, others feel permission to follow. This isnt about bullet points. Its not about telling. Its about showing. Its about the feeling. Safe Danger works because you feel the risk, you feel it pay off, and your brain starts to build an appetite for more. 2. Build Safe Danger by leveling the playing field. Most workplaces celebrate what people do, not who they are. Thats efficient, but brittle. If your value depends on flawless output, everyones going to hide their messier truthsthe exact truths teams need to share to collaborate and innovate and grow. If you want to practice building a space that celebrates people for who they are, there are three principles I use in my workshops to create the safe danger that makes people feel able to lower their guard. These three principles help level the playing field so that no one has to worry about embarrassment, and everyone is set up for success: Intention over execution. When I have people make something in response to a prompt, I dont focus on what people make; I focus on why they made it. Whether someone has labeled themselves as creative or uncreative doesnt matter. Talent is out of peoples control. I reward the choices within their control: generosity, effort, and thoughtfulness. We dont grade the drawing; we use it to focus on the ideas its meant to express. Curiosity over comparison. Instead of saying, Thats beautiful, which immediately builds a hierarchy and starts everyone else wondering if theirs is as good, Ill say, I see you used all bluewhat made you choose that? That neutral curiosity says, This is valuable, and I want to know more about how your mind works. Journey over destination. The goal of having people make things is the story behind it: what mattered to you, what you noticed, what you felt. Safe Danger is not about the creation, its about what you learn in the making and what you reveal about yourself and others in the process. When someone feels seen for how they show up, not what they produce, they feel safe to be more themselves. Suddenly, even the most resistant introvert or battle-worn cynic starts participating more fully. This is how you build psychological safety in minutes, not months: make it safe to be seen, and worth it to share. 3. Fun isnt enough for connection. My specialty is helping people connect quickly and meaningfully. That falls under the heading of team building. Even though there can be lots of fun in the process, most traditional team-building activities dont actually build the team. There are three pitfalls in a lot of team-building ideas: Competition. Lots of team-building leans into competition because its a quick, easy way to get people fired up. But competition inherently divides people, pits them against each other, people start showing off, and most people lose. Not a great mindset for authentic connection. Passivity. Guest speakers or cooking classes can be easy and pleasant, but people dont really contribute any value to the experience themselves. You never want someone to walk away thinking no one would have noticed if they had skipped that. Everyone needs to feel that they matter. Old news. This simply means you carried old dynamics into a new room: fun stuff, like happy hours and escape rooms, where the loud people get loud, the quiet get quiet, and cliques stick together. People leave as they arrived, with no new insight or feeling. Fun matters. It just isnt enough on its own. If nothing new was revealed about who we are, we didnt build a teamwe filled a calendar. Thats why I like to use play and creativity to help create safe danger. Creativity is like an oven mitt. It lets you handle dangerous material without getting burned. People believe theyre talking about what they made, but theyre actually sharing their values, priorities, and perspectives on life. They get to be vulnerable without feeling threatened, to feel seen without being judged. One of my favorite examples of this is an activity called Orchestra of Optimism. I ask people to think about how it feels for them to go from being stuck to being inspired. Then I have them sketch that out on a pice of papera tornado? An EKG? A plate of spaghetti? Next, I ask them to compose a 30-second soundtrack of that journey, using whatevers at handstaplers, coffee mugs, plants, carpet, its all fair game. The performances are short, wordless, and totally unique. Everyones inner process is different, yet that individuality can get lost when we all use the same words to describe ourselves. But translating feelings into sound forces us out of our usual shortcuts. Its a little playful, a little vulnerable, and surprisingly revealing. In 15 minutes, youve learned something real about how each person navigates challengeinsight that transfers to work. With a little safe danger, fun stops being a diversion and becomes a delivery mechanism for understanding. 4. Soft stuff gets solid results. Leaders often ask, Does this soft stuff, like trust and connection, actually move the numbers? Yes, because the soft stuff enables the hard stuff. Psychological safety is the top predictor of team effectiveness. Amy Edmondsons research shows that teams in which people can speak up without fear learn faster and perform better. Gallups Engagement data consistently links high-trust cultures with better retention, productivity, and profitability. A major productivity study by the University of Warwick suggests that when people genuinely enjoy their work, output skyrockets. Building cultures around the soft stuff is not about being nice. Its about reducing the hidden tax of fear and loneliness so brains can do their best work. Psychological safety is the top predictor of team effectiveness. Ive seen this translate in rooms that care deeply about resultslike competitive sales teams. One leader told me after a Safe Danger activity, We still love to push each other, but this showed us the difference between competing against each other and competing with each other. That shift can unlock more pipeline suggestions, more honest post-mortems, and faster iteration. If you want speed, use Safe Danger to build trust. If you want better ideas, use it to lower the social cost of being wrong. If you want accountability, use it to normalize admitting reality. Safe Danger activities arent a detour from performance; theyre a secret shortcut. 5. Small risks can yield big returns, no matter who you are. Im a deep introvert with a healthy cynical streak. For years, I would have rather run for the hills than do a team building skit. But Safe Danger creates the space for everyoneeven skeptical introverts like meto engage. It works for anyone who wants to grow, connect, or stop feeling so alone at work or home. Safe Danger can even adapt from the everyday to the extreme. Recently, I worked with a team ten days after a colleague was murdered in a workplace shooting. Theyd had time off and counseling, but this was their first time back in the office. At lunch, the mood was light but carefulpolite armor. Chit chat. But during the Safe Danger session, that all shifted with a simple prompt: How do you want to grow as a person this year? The first person held up a small, funny gift a colleague had made for him: I want to live differently after this. Shoulders dropped. People leaned in. The room became deep but not heavy, meaningful but not morose. It wasnt therapy; it was permission. After that, one by one, they all spoke about the changes they hoped to make and how they were going to help each other get there. But you dont need a crisis. The principle is the same whether youre an introvert during a Tuesday stand-up or a team carrying unspoken weight: create a container where a small, honest risk is obviously worth it. Do that repeatedly, and you get compounding returns in trust, candor, and creativity. Taking small, brave risks can make a real difference at work, home, or anywhere. Anyone can practice Safe danger in daily life by taking one small risk that reassures your brain that honesty is worth it here. Taking small, brave risks can make a real difference at work, home, or anywhere. Pay attention to the moments that you hold back, like the joke you almost made or an honest thought you edited out. Those are opportunities to change course. Most of us are living someone elses life. Were following expectations we inherited instead of choices we made ourselves. We learn early on to hide or diminish the qualities that make us unique in order to fit in. Safe Danger allows us to risk showing up as our real selves instead of someone elses version of us. Its a chance to rekindle our dimmed light, so we can rediscover and express the parts of ourselves that may have been scared into silence. If youre not speaking with your own unique voice, the world is missing out. The people who mean the most to you, look up to you, and people you may never even meet, are all missing out if youre not standing out. The risk you take is never as big as the reward it returns. Enjoy our full library of Book Bitesread by the authors!in the Next Big Idea App. This article originally appeared in Next Big Idea Club magazine and is reprinted with permission.
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The average rate on a 30-year U.S. mortgage fell to its lowest level of 2025 this week, an encouraging sign for prospective home buyers. The average long-term mortgage rate dipped to 6.15% from 6.18% last week, mortgage buyer Freddie Mac said Wednesday. That’s the lowest average long-term rate since October 3, 2024, when it dipped to 6.12% before shooting back up. One year ago, the rate averaged 6.91%. Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, fell this week to 5.44% from 5.50% the previous week. A year ago, it averaged 6.13%, Freddie Mac said. Mortgage rates are influenced by several factors, from the Federal Reserves interest rate policy decisions to bond market investors expectations for the economy and inflation. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans. The 10-year yield was at 4.14% at midday Wednesday, down a touch from last weeks 4.15%. The average rate on a 30-year mortgage has been mostly holding steady in recent weeks since Oct. 30 when it dropped to 6.17%, which at the time was its lowest level in more than a year. Mortgage rates began easing in July in anticipation of a series of Fed rate cuts, which began in September and continued this month. The Fed doesnt set mortgage rates, but when it cuts its short-term rate that can signal lower inflation or slower economic growth ahead, which can drive investors to buy U.S. government bonds. That can help lower yields on long-term U.S. Treasurys, which can result in lower mortgage rates. Even so, Fed rate cuts dont always translate into lower mortgage rates. Home shoppers who can afford to pay cash or finance at current mortgage rates are in a more favorable position than they were a year ago. Home listings are up sharply from 2024, and many sellers have resorted to lowering their initial asking price as homes take longer to sell, according to data from Realtor.com. Still, affordability remains a challenge for aspiring homeowners, especially first-time buyers who dont have equity from an existing home to put toward a new home purchase. Uncertainty over the economy and job market are also keeping many would-be buyers on the sidelines. Sales of previously occupied U.S. homes rose in November from the previous month, but slowed compared to a year earlier for the first time since May despite average long-term mortgage rates holding near their low point for the year. Through the first 11 months of this year, home sales are down 0.5% compared to the same period last year. Economists generally forecast that the average rate on a 30-year mortgage will remain slightly above 6% next year. Matt Ott, AP business writer
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U.S. stocks are slipping in afternoon trading Wednesday as Wall Street closes out a banner year for markets driven by both optimism and uncertainty. The S&P 500 was down 0.2%. The Dow Jones Industrial Average fell 100 points, or 0.2%, as of 1:47 p.m. Eastern time. The Nasdaq composite fell 0.1%. The stock indexes are coming off a three-day losing streak. Trading is expected to be light ahead of the New Years Day holiday, when markets will be closed. With just one trading day left before the year ends, most big investors have closed out their positions for the year and trading volume has been very thin. Even after their mini post-Christmas pullback, the indexes are on pace for strong gains for the year. The S&P 500, which set 39 record highs in 2025, is up about 17% for the year, its third straight double-digit annual gain. The Nasdaq is up 21.1% and the Dow has gained 13.4%. Wall Streets 2025 gains came as investors embraced the optimism surrounding artificial intelligence and its potential for boosting profits across almost all sectors. But the market had no shortage of turbulence along the way amid President Donald Trumps on-again, off-again tariffs on imported goods worldwide and uncertainty over the trajectory of interest rates. The S&P 500 plunged nearly 5% on April 3, its worst day since the 2020 COVID crash. It fell another 6% a day later, after Chinas response raised fears of an escalating trade war. Worries also gripped the U.S. Treasury market. Trump eventually put his tariffs on pause and negotiated agreements with countries to lower his proposed tariff rates on their imports, helping calm investors nerves. Strong profit reports from companies and three cuts to interest rates by the Federal Reserve also helped drive markets higher. Still, the AI frenzy that drove markets in 2025 did not come without concerns. Chief among them is the worry that artificial intelligence technology may not produce enough profits and productivity to make all the investment worth it. That could keep the pressure on AI stocks like Nvidia and Broadcom, which were responsible for much of the markets gains this year. And its not just AI stocks that critics say are too pricey. Stocks across the market still look expensive after their prices climbed faster than profits. On top of concerns that stocks are overvalued, the ongoing impact of the wide-ranging U.S.-led trade war threatens to add more fuel to inflation in the U.S. Despite the Fed cutting rates over concerns about the labor market, inflation remains solidly above the central banks 2% target. Wall Street is betting that the Fed will hold interest rates steady at its next meeting in January. Traders got an update on the state of the job market Wednesday. The Labor Department reported that fewer Americans applied for unemployment benefits last week with layoffs remaining low despite a weakening labor market. All of the sectors in the S&P 500 were in the red Wednesday, with technology stocks among the biggest drags on the market. Western Digital fell 2.1% and Micron Technology was down 1.5%. Treasury yields were mostly higher in the bond market. The yield on the 10-year Treasury rose to 4.16% from 4.13% late Tuesday. The yield on the two-year Treasury, which moves more closely with expectations for what the Federal Reserve will do, rose to 3.47% from 3.45%. Trading in precious metals continued to be volatile as the year winds down. Silver swung back to a big loss, giving back 9.1% after Tuesday’s gain of more than 10%. Following Friday’s 7.7% jump, silver lost nearly 9% on Monday. It’s still up more than 140% this year. Gold was down 1.2%, but is still up about 64% in 2025. U.S. benchmark crude slipped 0.7% to $57.55 per barrel. The price of Brent crude, the international standard, fell 0.6% to $60.97 per barrel. Global stock markets including those in Germany, Japan and South Korea were closed Wednesday for the New Years holidays, while trading was mixed in those that remained open. Alex Veiga, AP business writer
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Americans filed the fewest new jobless claims in a month last week, and while the number of unemployed workers collecting relief payments has eased from recent highs, there is little indication of a break from the weak hiring environment that settled in over the course of President Donald Trump‘s first year back at the White House. Initial claims for state unemployment benefits for the week ended December 27 dropped unexpectedly by 16,000 to a seasonally adjusted 199,000, the lowest since the end of November, Labor Department data showed on Wednesday. Economists polled by Reuters had forecast claims would rise to 220,000. The report was published a day early because of the New Year’s Day holiday. Claims have been volatile in recent weeks amid challenges in adjusting the data for seasonal fluctuations ahead of the holiday season. The labor market remains locked in what economists and policymakers describe as a “no hire, no fire” mode, and the final report of 2025 was largely emblematic of that. Though the economy remains resilient, with gross domestic product increasing at its fastest pace in two years in the third quarter, the labor market has almost stalled. Labor demand and supply have been impacted by Trump’s dramatic policy shifts since he began his second presidency in January, most notably his steep import tariffs and his aggressive immigration crackdown that has limited worker supply, economists say. The number of people receiving unemployment benefits after an initial week of aid, a proxy for hiring, fell by 47,000 to a seasonally adjusted 1.866 million during the week ending December 20, the claims report showed. “The drop in initial unemployment claims to 199,000 in the week of Christmas was likely another seasonal-adjustment distortion,” John Ryding, chief economic adviser at Brean Capital, said. “Bigger picture, we have not seen a meaningful increase in layoffs as signaled by these data in 2025 with the average level of claims in the year at 226,100 compared to 223,000 in 2024.” Continuing claims have eased from recent highs Continuing claims had neared the 2 million mark in late October but have eased off some as the year wound down and a record-long federal government shutdown ended in mid-November. While off that recent peak, continuing claims are somewhat higher than they were at this time last year, and at a level that aligns with a survey from the Conference Board last week showing consumers’ perceptions of the labor market deteriorated this month to levels last seen in early 2021. Hiring has slowed substantially in 2025, averaging just 55,000 new jobs created a month through November, roughly a third of the pace in 2024, and the breadth of hiring has narrowed as employers awaited greater clarity on Trump’s policies and as they gauge their workforce needs against the rapid rollout of productivity-enhancing artificial intelligence tools. The slow hiring pace has brought job creation to near what economists estimate is the break-even rate that keeps the jobless rate from rising. The unemployment rate increased to a four-year high of 4.6% in November, though part of the rise was because of technical factors related to the 43-day government shutdown. A jobless rate tracker from the Federal Reserve Bank of Chicago suggests it remained unchanged in December at 4.6%. The Labor Department, which was unable to produce a jobless rate for October because of the shutdown, will publish employment figures for December on January 9. Still, the number of Americans on jobless benefits rolls as a share of the U.S. labor force is just 1.1% and has changed little over the course of this year even as the formal unemployment rate has climbed from 3.7% in January to November’s 4.6%. The lack of correlation in movement between the two data points is very unusual, and stands as further evidence for some economists of the reluctance among employers to cut headcount in an environment of still-tight labor supply. What does it mean for the Fed? The unusual attributes of the current job market are central to the debate underway at the Federal Reserve about whether to cut interest rates further to forestall further weakening of employment or to hold borrowing costs steady to keep pressure on inflation that remains above the Fed’s 2% target. The U.S. central bank this month cut its benchmark overnight interest rate by another 25 basis points to the 3.50% to 3.75% range, but signaled rates were unlikely to fall in the near term as policymakers await clarity on the direction of the labor market and inflation, which has drifted upward over the year thanks to pressure on goods prices from Trump’s tariffs. Minutes of the December 9-10 meeting released on Tuesday showed the depth of the divide among policymakers. Even some of those who supported the rate cut acknowledged “the decision was finely balanced or that they could have supported keeping the target range unchanged,” given the different risks facing the U.S. economy. For Fed officials, much hinges on what a blitz of data coming in the early weeks of 2026 reveals about the economy’s direction. Some of those policymakers who were either opposed or skeptical of the most recent cut “suggested that the arrival of a considerable amount of labor market and inflation data over the coming intermeeting period would be helpful on making judgments about whether a rate reduction was warranted,” the meeting minutes said. Dan Burns, Reuters
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