After months of operating in the dark, markets finally received some inflation data last week. The long-delayed November Consumer Price Index offered an official glimpse into day-to-day price pressures after a record-length government shutdown had disrupted the economic calendar.

The figures themselves were better than expected. Headline inflation came in at 2.7% year on year, while core inflation registered 2.6%. That was below the near-3% readings economists had been bracing for, and it kept inflation within the psychologically important “two-handle” range that markets have become fixated on heading into 2026.

At the same time, the report was far from ideal or “clean.” Because the US Bureau of Labor Statistics was unable to collect October price data during the shutdown, the release lacked the usual month-to-month changes that analysts rely on to gauge momentum. Instead, it resembled a sharp snapshot — confirmation of where inflation currently stands rather than a clear signal of where it is heading next.

That distinction matters. And not just for interest rates.

When inflation becomes a question about America itself

In 2025, inflation stopped being merely a story about prices. Instead, it became part of a broader question markets were asking about the United States itself — namely, whether US assets still deserve the “premium” they have enjoyed for more than a decade, across everything from equities and bonds to the dollar itself.

On that front, the details of the CPI report offered little reassurance. Prices for furniture and “household operations” — a broad category covering everything from cups and cutlery to shovels and lawn trimmers — continued to rise as companies began passing through higher import costs linked to tariffs. Food inflation also remained stubborn, with meat, poultry, and egg prices up about 5% over the past year. Housing costs continued to climb as well, with shelter prices rising roughly 3% year on year.

This mix has become familiar: uneven goods inflation, tariffs quietly doing their work in the background, and persistently elevated rents and housing costs. Federal Reserve Chair Jerome Powell has repeatedly pointed to trade policy as one reason inflation has exceeded expectations, while also stressing that officials need clearer evidence before concluding whether price pressures reflect a one-off adjustment or something more durable. For currency markets, that ambiguity carries real consequences.

Why inflation matters for the dollar even when it is falling

Currency markets are not always sensitive to inflation itself. What matters is what inflation signals — about growth, policy, credibility, governance, and, perhaps above all, predictability.

Over the past decade, the United States was able to tolerate higher inflation without its currency being punished. During the pandemic, for example, the dollar initially surged as a safe haven and then remained unusually strong for years as the US economy outperformed its peers and led the global rate-hiking cycle. Stronger growth, higher yields, deep capital markets, and institutional stability — as long as that mix held together, the dollar premium remained intact.

In 2025, that mix began to fray.

Even as inflation eased, it did so amid tariff-driven distortions, political pressure on the Federal Reserve, and months of missing data that made the economic picture harder to read. Investors were no longer asking only whether prices were falling quickly enough; they were questioning whether the rules of the game themselves were changing.

That reassessment defined the dollar’s year.

Why 2025 may be remembered as the year the world blinked at the dollar

At the start of January, the dollar entered the year near its recent historic highs, supported by a decade-long rally. Then the tide turned.

From January through June, the dollar fell about 11% against a basket of major currencies — its worst first-half performance since the early 1970s, when the collapse of the Bretton Woods system and the oil crisis upended the global order.

What changed had less to do with monetary policy and more to do with expectations. After the 2024 election, markets largely assumed another phase of US outperformance, supported by capital inflows, resilient American consumers, and a politically independent Federal Reserve. That narrative cracked in the spring, when fresh tariff announcements and broader uncertainty forced investors to rethink growth, inflation, and public debt all at once.

Crucially, the dollar weakened even as the Federal Reserve resisted signaling imminent rate cuts. Instead, markets began pricing a different story: slower US growth, eroding governance advantages, and a loss of clarity. Once investors stopped believing the United States was unambiguously dominant, the dollar’s yield premium stopped doing the same work.

Capital flows followed. Foreign investors hold more than $30 trillion in US assets, much of it historically unhedged against currency risk — an implicit bet on a strong dollar. As the currency slid in early 2025, those same investors began adding currency hedges, effectively selling dollars into the market. Given the scale of foreign ownership of US assets, even small shifts in hedging behavior can generate meaningful pressure.

A floor without a rebound

By mid-year, the dollar’s decline had stabilized. Some stronger-than-expected economic data in July, along with signs that tariffs were not hitting activity as hard as feared, helped steady sentiment. But stabilization is not recovery.

For most of the second half of 2025, the dollar hovered near its lows, moving sideways without a convincing rebound. That behavior itself is telling. The initial repricing of US dominance may be complete, but the old premium has not been restored — artificial-intelligence equities notwithstanding.

Then came Thursday’s inflation report.

Had the CPI data delivered a clean, decisive disinflationary trend, it might have provided a catalyst — reinforcing the idea that inflation risks were fading, that the Federal Reserve could ease policy with confidence, and that US outperformance was reasserting itself. Instead, markets received only a partial signal. Inflation is easing, but unevenly; tariffs are still pushing prices higher; uncertainty remains elevated. For currency markets that prize clarity, that was not enough to alter the prevailing dynamic.

Is the dollar “finished” in 2026?

That is the wrong question. The better one is whether markets will complete the recalibration that began in 2025 — or decide that the United States remains, for better or worse, the least risky place in the world.

Some strategists, including those at Morgan Stanley, expect further dollar weakness as US growth slows, interest-rate differentials narrow, and foreign investors continue to hedge. Others argue that the downturn implied by recent consumer-confidence surveys could, paradoxically, trigger a renewed “flight to safety” that supports the US dollar.

Both outcomes are plausible. What seems less likely is a swift return to the effortless dollar dominance that characterized much of the 2010s.

What this means for all of us

Currency moves are among the most abstract forces in markets — a haze of decimals and charts. Until, of course, they show up in real life. A weaker dollar means more expensive foreign travel, costlier imports — champagne, handbags, those nice French shoes I keep eyeing online — and fewer bargains overall. For most households, it is a slow accumulation of costs that makes life feel just a bit more expensive.

The real story is not the dollar’s 11% decline. It is what caused it. For the first time in a long while, investors around the world are pricing the possibility that “American exceptionalism” may come with an expiration date.

Whether they are right or wrong, that shift in expectations looks to me like the most consequential repricing of 2025.

Consumers already worn down by a prolonged surge in prices are bracing for fresh pressure — and this time, it is coming from copper.

Copper prices have surged past $12,000 per metric ton for the first time ever, hitting a record high on the London Metal Exchange and unleashing a new wave of inflationary pressure across the economy.

The rally reflects a volatile mix of trade uncertainty, supply tightness, and rising demand — increasingly putting everyday products in the firing line.

Tariffs fuel the surge

Prices have been pushed higher in part by tariffs imposed by US President Donald Trump, who in August slapped a 50% duty on semi-finished copper products and certain copper derivatives under national security authorities.

While refined copper — which accounts for roughly half of US imports — remains exempt for now, the measures have already disrupted global trade flows and tightened supply for US manufacturers.

The impact was amplified by front-loaded buying earlier this year, as buyers rushed to stockpile copper ahead of the tariffs taking effect on August 1. That scramble drained available inventories and drove prices higher worldwide, pushing copper to record levels even as demand in China, the world’s largest copper consumer, has softened.

The problem goes beyond tariffs

Tariffs are only part of the story.

Copper prices were already under pressure after years of underinvestment left the industry short of new mines. At the same time, demand has surged as copper use expands in electric vehicles, power grid upgrades, renewable energy projects, and data centers.

With few new projects capable of coming online in the near term, analysts say copper prices are likely to stay elevated — and consumers are already feeling the effects.

A direct hit to households

Copper runs through nearly every modern home, from electrical wiring and plumbing to heating and cooling systems.

Industry estimates suggest rewiring a home typically costs between $6,000 and $18,000, and can reach $30,000 in larger or older properties — a burden that has become heavier as copper prices climb.

Contractors say rising copper costs are already inflating bids for electrical panel upgrades, outlet installations, and renovation projects, especially in kitchens and bathrooms.

Household appliances under strain

Major household appliances are also feeling the squeeze. Refrigerators, washing machines, dryers, dishwashers, and air conditioners rely heavily on copper for motors, compressors, and coils.

A single washing machine can contain between one and two pounds of copper, while larger appliances use even more. As raw material costs rise, manufacturers often respond by raising prices, cutting promotions, or downgrading specifications in lower-end models.

Cars — and EVs even more exposed

Vehicles are another pressure point. A conventional gasoline-powered car contains roughly 50 to 55 pounds of copper, while electric vehicles use far more — often between 150 and 200 pounds — due to high-voltage wiring, battery systems, and electric motors.

That makes EV pricing particularly sensitive to copper costs, complicating automakers’ efforts to make electric vehicles more affordable for consumers.

Electronics not immune

Even electronics are not spared. Smartphones typically contain 15 to 30 grams of copper, while desktop computers can include more than two pounds.

Although the amount per device may seem small, the scale of global production means higher copper prices still squeeze manufacturers, especially in lower-priced segments of the market.

Potential impact on electricity bills

Utilities could also feel the strain over the medium term. Copper is a critical component of power grids and electrical infrastructure, and higher costs could eventually feed into electricity delivery prices as utilities upgrade systems to support electric vehicles and renewable energy.

In short, with copper prices holding at historic highs, the impact is set to ripple from global markets into the details of everyday life — adding yet another burden for consumers worldwide.

Bitcoin fell on Tuesday, ending a brief recovery rally, as traders remained cautious toward cryptocurrencies, while anticipation of key US economic data added to broader risk-off sentiment.

Bitcoin dropped 2.6% to $87,655.0 as of 08:42 AM US Eastern Time (13:42 GMT). The world’s largest cryptocurrency had recovered earlier this week to around the $90,000 level before retreating again on Tuesday.

Broader cryptocurrency prices also pulled back after a short-lived rebound, although losses remained relatively limited amid thin trading volumes due to year-end holidays.

Bitcoin’s recovery stalls ahead of US data

Bitcoin’s recent recovery was partly weighed down by caution ahead of major US economic data due later on Tuesday.

Third-quarter gross domestic product data are expected to show a slight slowdown in growth compared with the previous quarter, particularly amid volatile consumer spending and fading labor market momentum.

Markets are also awaiting the release of October personal consumption expenditures (PCE) data, the Federal Reserve’s preferred inflation gauge.

Any further signs of a cooling US economy, especially on the inflation front, could open the door for additional interest rate cuts by the Federal Reserve.

However, analysts cautioned that December and fourth-quarter economic data are likely to be more indicative of underlying US economic conditions, as October and November readings may have been distorted by the effects of a prolonged government shutdown.

Strategy pauses Bitcoin purchases, boosts cash reserves

Strategy Inc (NASDAQ: MSTR), the world’s largest corporate holder of Bitcoin, has paused its cryptocurrency purchases in recent weeks and increased its cash reserves, signaling preparation for a potential downturn in crypto prices.

In a regulatory filing, the company said it raised $748 million in the week ended December 21, without purchasing any Bitcoin during that period. Earlier in December, the firm had bought nearly $2 billion worth of Bitcoin, lifting its total holdings to 671,268 Bitcoin.

The company’s shares have declined in recent months, amid growing concerns over the long-term viability of its Bitcoin-focused strategy.

Earlier in December, Strategy was reported to have set aside a $1.4 billion reserve to cover future dividend payments and interest obligations tied to its multiple capital commitments, amid fears that continued declines in Bitcoin prices could force the company to sell part of its holdings to meet those obligations.

The company’s core equity market capitalization has fallen by about 50% during 2025, with pressure intensifying after the stock was excluded from inclusion in a major MSCI index.

Cryptocurrency prices today: altcoins fall alongside Bitcoin

Broader cryptocurrency prices halted their recent recovery and moved lower in line with Bitcoin.

Ether, the world’s second-largest cryptocurrency, fell 3.7% to $2,941.48. BNB slipped 1.7% to $848.51, while XRP dropped 2.2% to $1.88.

Oil prices were largely steady on Tuesday, as markets weighed the possibility that the United States could sell Venezuelan oil it has seized against rising concerns over supply disruptions following Ukrainian attacks on Russian ships and ports.

Brent crude futures rose 6 cents to $62.13 per barrel by 12:21 GMT, while US West Texas Intermediate (WTI) crude edged up 2 cents to $58.03 per barrel.

Prices had climbed more than 2% on Monday, with Brent posting its biggest daily gain in two months, while WTI recorded its largest rise since November 14.

“The market appears to be caught between bearish factors linked to abundant supply and the latest supply-side concerns stemming from the US blockade that is reducing Venezuelan oil loadings and exports, as well as the exchange of strikes between Russia and Ukraine that targeted ships and ports late on Monday,” said Janiv Shah, an analyst at Rystad.

US President Donald Trump said on Monday that the United States may keep or sell the oil it has seized off the coast of Venezuela in recent weeks, as part of measures that include imposing a “blockade” on sanctioned oil tankers entering or leaving the South American country.

Barclays said in a note dated Monday that oil markets are expected to remain oversupplied during the first half of 2026. However, the bank added that the surplus is projected to narrow to about 700,000 barrels per day in the fourth quarter of 2026, noting that any prolonged supply disruption could lead to tighter market conditions.

On the ground, Russian forces shelled Ukraine’s Black Sea port of Odesa late on Monday, damaging port facilities and a vessel, marking the second attack on the area in less than 24 hours. In response, Ukrainian drone attacks damaged two ships and two piers and sparked a fire in a village in Russia’s Krasnodar region.

Ukraine has also targeted Russia’s maritime logistics infrastructure, focusing on oil tankers belonging to the so-called “shadow fleet,” which is used to circumvent sanctions imposed on Russia.