The dollar logged its sharpest drop since September after the Federal Reserve cut rates by 25 basis points and Chair Jerome Powell emphasized labor-market risks over inflation pressures. The Bloomberg Dollar Spot Index fell 0.4% as investors interpreted Powell's tone as more dovish than expected, with the greenback weakening against all major developed-market currencies. Strategists said upcoming U.S. jobs and inflation data will be more pivotal for the dollar's trajectory than Wednesday's policy decision.

US investors are increasing investments in Chinese AI companies despite calls from US lawmakers for tighter restrictions on such funding. Major US funds such as BlackRock, Vanguard and Fidelity have increased stakes in Chinese tech giants such as Alibaba, Tencent and Baidu, and ETFs tracking Chinese tech have also seen significant inflows.

The Federal Reserve will start purchasing $40 billion in Treasury bills monthly starting Friday to ease short-term funding costs and rebuild reserves, responding to rising short-term rates and funding market pressures. This move comes earlier and is larger than expected, with the Fed noting that reserve balances have declined to ample levels. The New York Fed expects elevated reserve management purchases for a few months before reducing the pace.

The Federal Reserve's recent rate cut faced significant internal resistance, with three dissenting votes and four officials quietly objecting by projecting higher rates for 2025. President Donald Trump criticized the cut as insufficient and expressed a desire for lower rates, posing a challenge for Powell's successor. The Fed's decision reflects a split between officials concerned about a weakening labor market and those wary of cutting rates in a strong economy.

Options positioning shows traders are overwhelmingly betting the AI rally will extend into early 2026, with call-option open interest on the Magnificent Seven near its highest since early 2023 relative to puts. Falling implied volatility and expectations of Federal Reserve easing have reduced demand for hedges, leading strategists to describe year-end tech protection as "a waste of money." Despite valuation concerns, derivatives flows show investors are still paying for upside exposure, though a minority of managers warn of a potential correction early next year.

Gemini Titan, an affiliate of Gemini Space Station, has secured a Designated Contract Market license from the Commodity Futures Trading Commission, completing a five-year process. This regulatory milestone allows Gemini to introduce regulated prediction markets to US customers, placing it alongside competitors like Kalshi and Polymarket.

Over $514 million in crypto positions were liquidated in the past 24 hours, marking one of the biggest leverage resets in weeks. The majority of liquidations were long positions, reflecting traders' bullish bets before a sudden market reversal. More than 155,000 traders were affected, and the largest single liquidation was a $23.18 million Bitcoin position on Hyperliquid.