The U.S. dollar index hit its highest degree for greater than two years on Thursday, as the brand new buying and selling yr kicked off and buyers equipped for the return of Donald Trump to the White House this month.
The gauge of the buck in opposition to a basket of currencies was up 0.8% at 1:00 p.m. ET, at its strongest since November 2022.
Optimism across the U.S. economic system was in focus as markets reopened following disrupted commerce over Christmas and the New Year’s vacation. Wall Street stocks opened larger although later traded combined.
“Already [U.S.] progress has saved outpacing forecasts as customers and firms have shrugged off the impression of excessive rates of interest, with the unemployment fee remaining low,” Susannah Streeter, head of cash and markets at Hargreaves Lansdown, stated in a Thursday notice.
“Investors are hopeful {that a} goldilocks state of affairs would be the story of 2025, amid guarantees of decrease taxes and deregulation beneath a second Trump presidency.”
Euro/U.S. greenback
“The buck continues to seek out help from expectations of USD-bullish Trump insurance policies and fading conviction across the Fed’s rate-cut trajectory for 2025,” Mohamad Al-Saraf, FX and charges technique affiliate at Danske Bank, stated in a Thursday notice.
Key information forward in assessing the robustness of the U.S. macro narrative contains Thursday’s jobless claims and Friday’s ISM manufacturing report, together with subsequent week’s nonfarm payrolls, Al-Saraf stated.
He added that the euro was more likely to fall again to U.S. greenback parity within the medium time period. However, Al-Saraf stated that market pricing for fewer than two quarter-point fee cuts this yr could show overly hawkish, and together with any detrimental U.S. information surprises may set off a greenback correction.
