The Greenback Gathers Strength as Inflation Looms
London: 8 January 2024 (TraderMade): The US dollar flexed its muscles on Monday, extending its reign against major currencies in a cautious market holding its breath before this week's crucial US inflation data. This critical report promises to shed light on the Federal Reserve's next moves, casting a long shadow over global forex trading.
USD against significant currencies
Overall, the picture remained muted. Sterling dipped slightly (GBPUSD at 1.26923), while the euro followed suit (EURUSD is at 1.09337), both still digesting last week's losses. Meanwhile, the Aussie, already down 1.5% from previous week, trudged further south, extending its losing streak.
The battered yen, still reeling from last week's 2.6% pummeling, clung precariously close to the 145 per dollar mark. The USDJPY pair was 144.507 by about 08:44 AM GMT. Meanwhile, risk-sensitive currencies like the Aussie and Kiwi took a backseat, edging lower in the face of the prevailing uncertainty.
Other factors boosting the greenback
Adding fuel to the dollar's fire was a subtle uptick in US Treasury yields, dampening hopes for a rapid series of Fed rate cuts this year. Friday's mixed economic data, showcasing resilient job growth and a concerning slowdown in the services sector, only amplified the market's jitters.
This cautious tango has significantly cooled expectations of an early Fed rate cut in March.
In essence- the greenback's ascent reflects a market holding its cards close to its chest. This week's inflation data is crucial to unlocking the next chapter in the global currency saga, with the Fed's monetary policy dance taking center stage.
