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The Dollar Continues To Rise As Attention Shifts To U.S. Statistics

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Student Loans; Source- MARCA

Following a day of sharp gains, the US dollar strengthened again on Wednesday, supported by high U.S. Treasury yields and a cautious turn that worried Wall Street.

Trading Muted

Due to the holiday-closing of the Japanese markets and investors’ anticipation of significant U.S. economic data, such as the minutes from the Federal Reserve’s December meeting, trading was comparatively muted.

The euro hit a record low of $1.092 against the dollar, down 0.2% from December 19. On Tuesday, it saw its largest daily decline since July, down 0.95%.

Building on its 0.86% advance on Tuesday, this helped drive the dollar index, which measures the currency versus six significant peers, up 0.22% to 102.47.

Bets for U.S. rate cuts in 2024 were fueled by a decline in inflation and a dovish stance during the Federal Reserve’s December policy meeting, which caused the greenback to fall and led to a rise in Treasuries and stocks in November and December. Last Monday, the dollar index fell to a five-month low of 100.61.

Following a day of sharp gains, the US dollar strengthened again on Wednesday, supported by high U.S. Treasury yields and a cautious turn that worried Wall Street.

Due to the holiday-closing of the Japanese markets and investors’ anticipation of significant U.S. economic data, such as the minutes from the Federal Reserve’s December meeting, trading was comparatively muted.

The euro hit a record low of $1.092 against the dollar, down 0.2% from December 19. On Tuesday, it saw its largest daily decline since July, down 0.95%.

Building on its 0.86% advance on Tuesday, this helped drive the dollar index, which measures the currency versus six significant peers, up 0.22% to 102.47.

Bets for U.S. rate cuts in 2024 were fueled by a decline in inflation and a dovish stance during the Federal Reserve’s December policy meeting, which caused the greenback to fall and led to a rise in Treasuries and stocks in November and December. Last Monday, the dollar index fell to a five-month low of 100.61.

Geopolitical Tensions

Dollar

Source: CNBC’s

Big tech names contributed to the S&P 500 and Nasdaq Composite ending lower on the first trading session of 2024, indicating that those trends did not continue into the New Year. Tuesday saw a sharp increase in Treasury rates as prices dropped, making US debt more appealing and strengthening the dollar.

The Fed’s December meeting minutes are expected at 1900 GMT (2 p.m. ET), and investors will be closely examining them for any clues regarding the number of rate cuts the central bank will actually implement this year.

A survey-based measure of the manufacturing sector and statistics on job postings in the United States for November could also influence markets prior to that. At $1.2622, sterling was last flat. It dropped 0.87% in the last session, marking the biggest daily decline in almost three months.

Concerns over rising geopolitical tensions were cited by analysts as a contributing factor in the risk-off attitude following the Tuesday killing of Hamas deputy commander Saleh al-Arouri by a drone attack in Beirut, the capital of Lebanon. Security reports from Lebanon and Palestine attributed his death to Israel, which has neither acknowledged nor responsibility denied.

Big tech names contributed to the S&P 500 and Nasdaq Composite ending lower on the first trading session of 2024, indicating that those trends did not continue into the New Year. Tuesday saw a sharp increase in Treasury rates as prices dropped, making US debt more appealing and strengthening the dollar.

The Fed’s December meeting minutes are expected at 1900 GMT (2 p.m. ET), and investors will be closely examining them for any clues regarding the number of rate cuts the central bank will actually implement this year.

A survey-based measure of the manufacturing sector and statistics on job postings in the United States for November could also influence markets prior to that. At $1.2622, sterling was last flat. It dropped 0.87% in the last session, marking the biggest daily decline in almost three months.

Concerns over rising geopolitical tensions were cited by analysts as a contributing factor in the risk-off attitude following the Tuesday killing of Hamas deputy commander Saleh al-Arouri by a drone attack in Beirut, the capital of Lebanon. Security reports from Lebanon and Palestine attributed his death to Israel, which has neither acknowledged nor responsibility denied.

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