Dollar Strengthens Ahead of US Economic Events
London: 11 December 2023 (TraderMade): The dollar flexes its muscles as the US economy takes center stage; meanwhile, the yuan wilts under deflationary woes.
The USDCNY pair closed on Friday, 8 December at 7.1239. At about 07:58 AM GMT today. The pair was at 7.1823, showing a 0.69% increase.
The US dollar gained ground ahead of crucial economic events in the United States. Investors are looking closely at upcoming inflation data and the Federal Reserve's final policy meeting of the year, which will likely set the tone for the dollar's trajectory in the near future.
Key Takeaways
- The dollar pushed back above 145 yen, reversing recent losses. This is partly due to growing speculation that the Bank of Japan might end its ultra-low interest rate policy.
- US job growth data released on Friday surprised markets by showing resilience in the labor market. This caused traders to push back expectations of when the Fed might start cutting interest rates, which supported the dollar.
- Investors are now focusing on US inflation data due on Tuesday and the Fed's policy decision on Wednesday.
- In China, consumer prices fell faster in three years in November, raising concerns about deflationary pressure and a slowing economy. This weighed heavily on the yuan, which weakened to a three-week low.
- The Australian dollar and New Zealand dollar, often seen as proxies for the yuan, also weakened on the back of China's economic concerns.
Overall, the US dollar's strength reflects the anticipation of crucial economic events this week. However, concerns about China's economic slowdown remain significant in the broader market outlook.
