Palladium prices extended their decline on Friday, pressured by a stronger U.S. dollar, uncertainty over demand, and expectations of higher supply.

Reuters reported, citing informed sources, that the United States is privately pushing Ukraine to accept a ceasefire agreement with Russia. Such a development would likely boost global supply of industrial metals as sanctions on Russia — one of the world’s largest palladium exporters — are eased.

According to Capital.com, palladium prices have risen about 26% since the start of October to roughly $1,500 per ounce. The surge came alongside gains in the platinum market and broader easing in global financial conditions.

Bets on U.S. rate cuts and earlier weakness in the dollar have also supported palladium as part of the so-called “gold + liquidity” rally that has lifted precious metals in recent weeks.

Palladium is used almost exclusively in catalytic converters for gasoline engines, meaning any price volatility directly affects cost structures for U.S. automakers and electronics manufacturers.

Technical analysis from Monex indicates resistance between $1,500 and $1,520 per ounce, with expectations for an overall bullish trend but continued choppy trading ahead. Analysts at CPM Group noted that palladium’s recent strength is “closely tied to platinum’s performance,” while warning that a softening U.S. labor market and persistent inflation could weigh on demand.

Despite a recently announced U.S.–China trade truce, comments from American officials suggest tensions remain elevated. The U.S. Treasury Secretary said China remains an unreliable trading partner, while President Donald Trump reiterated that his administration will not allow the export of advanced Nvidia chips to China or other countries.

The U.S. dollar index edged up 0.1% to 100.2 as of 14:43 GMT, trading between a high of 100.4 and a low of 99.9.

Palladium futures for December delivery fell 0.9% to $1,374 per ounce at 14:43 GMT.

Bitcoin briefly fell to $81,871.19 early Friday before stabilizing near $82,460, down about 10.2% over the past 24 hours.

Following nearly a month of persistent selling, Bitcoin is now trading 10% below its level at the start of the year, having erased most of the gains it made after Donald Trump’s election victory last year.

The last time Bitcoin slipped below $82,000 was in April — when it dropped to $75,000 — during a broad market selloff triggered by Trump’s announcement of sweeping tariffs at the “Liberation Day” event.

Based on data from Deribit — the options and futures exchange owned by Coinbase — CoinDesk reported that traders are positioning for further downside.

Ethereum, the second-largest cryptocurrency by market value, fell below $2,740, down more than 9.6% over 24 hours. Other major tokens also came under heavy pressure, with XRP, BNB, and SOL dropping 9.1%, 8.4%, and 10.6%, respectively. Dogecoin — the largest meme coin — lost 10.3% over the same period.

After hitting fresh record highs early last month, the crypto market has endured steady declines following an unprecedented single-day wipeout on October 10, when $19.37 billion in leveraged positions were liquidated in 24 hours. The event was sparked by Trump’s announcement of an additional 100% tariff on Chinese imports — a move he later walked back. Digital assets have also been caught in broader market volatility in recent days, with more than $2.2 billion liquidated over 24 hours, according to CoinGlass.

The total market value of all cryptocurrencies now stands at $2.92 trillion, according to CoinGecko — a 33% drop from the roughly $4.38 trillion peak reached in early October. Since the start of this month, Bitcoin’s market capitalization has fallen about 25%, marking the steepest monthly decline since the crypto crash of 2022, according to Bloomberg.

Shares of Strategy (formerly MicroStrategy) — widely seen as a proxy for Bitcoin due to its massive holdings — fell 2.44% in pre-market trading on Friday, after sliding 11% over the past week and 41% over the past 30 days. The company currently holds 649,870 BTC at an average purchase price of $74,430.

In a note earlier this week, JPMorgan analysts warned that Strategy faces a risk of removal from major indices such as the Nasdaq 100 and MSCI USA. Such an exclusion could drive further declines in its stock, and potentially weigh on crypto markets if the company is forced to sell part of its Bitcoin holdings.

Oil prices fell more than 2% on Friday, extending losses for a third straight session, as U.S. pressure to secure a peace agreement between Russia and Ukraine raised concerns about increased global supply, while uncertainty over interest rates continued to sap risk appetite.

Brent crude futures dropped $1.40, or 2.2%, to $61.98 a barrel by 10:10 GMT. U.S. West Texas Intermediate crude slid 2.5%, or $1.48, to $57.52.

Both benchmarks are on track for a weekly decline of about 4%, erasing the gains made last week.

Market sentiment has shifted decisively bearish as Washington pushes for a peace framework between Ukraine and Russia to end the three-year conflict — just as U.S. sanctions on Russian oil majors Rosneft and Lukoil are set to take effect on Friday.

Ukrainian President Volodymyr Zelensky said he would work with Washington on a plan to end the war.

“With reports of talks emerging at the same time U.S. sanctions on Russia’s two biggest oil companies take effect today, oil markets saw some relief from supply-risk concerns,” said Jim Reid, managing director at Deutsche Bank. “But a peace deal still appears distant.”

Analysts at ANZ echoed that caution, telling clients that “an agreement remains far from certain,” noting Kyiv’s repeated rejection of Moscow’s demands as unacceptable.

They added that the market has also grown skeptical about how effective the new restrictions on Rosneft and Lukoil will be. Lukoil has until December 13 to sell its large international portfolio.

A stronger dollar also weighed on crude, with the currency heading for its best week in more than a month as investors increasingly expect the Federal Reserve to leave interest rates unchanged next month.

Kelvin Wong, senior analyst at OANDA, said the CME FedWatch tool now shows the probability of a December rate cut has fallen sharply to around 35%, down from nearly 90% a month ago.

After months of heavy hedging triggered by the tariff shock that rattled the dollar earlier this year, foreign investors who rushed to protect their U.S. holdings against further depreciation are now slowing those efforts sharply — a vote of confidence that has helped the dollar rebound from its worst slump in years.

Analysts stress that hedging levels remain above historical norms, but activity has clearly retreated from the peak reached immediately after “Liberation Day” on April 2, when President Donald Trump announced sweeping trade tariffs.

At that time, foreign investors holding U.S. assets faced a double blow: falling equity and bond prices, and a sharp drop in the dollar. The fastest movers rushed to hedge against further currency losses, and many expected the wave to intensify. Instead, it faded — allowing the dollar to stabilize.

David Lee, head of FX and emerging markets research at Nomura, said: “Our conversations with clients now suggest that these hedging flows are less likely to come in as quickly as we anticipated back in May.”

The dollar index — which tracks the U.S. currency against major peers — has climbed about 4% since late June, when it was down roughly 11% after its worst half-year since the early 1970s.

Because hedging data is sparse, analysts rely on broad indicators and reports from custodians and major banks.

Figures from BNY — one of the world’s largest custodians — show that clients entered 2025 strongly long U.S. assets, indicating little expectation of additional dollar weakness and limited urgency to hedge. That changed in April, pushing hedging above normal, though still below the highs of late 2023 when markets expected the Federal Reserve to begin rate cuts.

“Dollar-diversification this year is talked about far more than it is actually implemented,” said Geoffrey Yu, senior market strategist at BNY.

Other custodians report similar trends.

State Street Markets’ analysis of assets under custody shows foreign equity managers hedged 24% of their dollar exposure by the end of October — up four percentage points since February but well below past levels that exceeded 30%. The firm also noted that hedging momentum slowed in recent weeks.

Differences appear across markets. A National Australia Bank survey of Australian pension funds found “no significant change” in hedging behavior toward U.S. equities. Meanwhile, data from Denmark’s central bank shows pension-fund hedging stabilized after jumping in April.

William Davies, CIO of Columbia Threadneedle, said the firm initially moved quickly to hedge its U.S. equity exposure when the dollar slumped, but later pared those hedges, betting the currency would not fall much further.

No “snowball effect”

Hedging flows themselves move currencies — adding hedges against a falling dollar requires selling the dollar, and removing hedges does the opposite.

If these flows coincide with shifts in interest rates, they can snowball into a self-reinforcing cycle that drives the currency lower.

Paul Mackel, head of FX research at HSBC, said: “There was a belief earlier this year that a snowball effect might develop, but that ultimately didn’t materialize.”

“It could happen next year,” he added. “But it’s not our base case.”

Still, investor behavior may be shifting. BlackRock estimates that 38% of flows into U.S. equity ETFs listed in Europe, the Middle East, and Africa this year have gone into hedged products — up from just 2% in 2024.

Costs, correlations, and complexity

Hedging costs are shaped by interest-rate differentials and often serve as a brake on hedging appetite.

Fan Luo, head of fixed income and currency solutions at Russell Investments, estimates Japanese investors pay roughly 3.7% annually to hedge against dollar weakness — a steep cost.

If USD/JPY stayed flat for a year, a hedged investor would lose 3.7% versus an unhedged one. Euro-funded investors face a hedging cost of about 2%.

“My rule of thumb for European investors is this: around 1% they don’t care much — 2% becomes meaningful,” Luo said.

Asset correlations also matter. The dollar usually strengthens when equities fall, offering a natural hedge for foreign investors.

That didn’t happen in April, fueling the hedging rush. This month, however, the dollar held steady even as equities dipped again.

Changing hedging policies can also be complicated for asset managers benchmarked to unhedged indices.

Fidelity International recommends European investors gradually raise hedging to 50% of their dollar exposure, but Salman Ahmed, head of macro and strategic asset allocation, says the process is “extremely complex” and may require changes in governance and benchmarks.

If rates move against the dollar and the currency weakens again — making hedging cheaper — pressure to shift strategies could increase.

“There is still enormous potential for hedging of dollar-denominated assets,” Nomura’s David Lee said. “But whether it happens — and how fast — remains an open question.” “That’s what the FX market is trying to figure out now.”