- The US Dollar Index (DXY) trades on a stronger note around 104.02 on Monday.
- The Fed chair reiterated that the next meeting in March was too early for a rate cut.
- The US Nonfarm Payrolls (NFP) for January rose to 353K from 333K in December, stronger than expected.
The US Dollar Index (DXY), a measure of the value of the US Dollar (USD) against a weighted basket of currencies used by US trade partners, gains momentum above the 104.00 psychological mark during the early European trading hours on Monday. The upbeat US job data and the expectation that the US Federal Reserve (Fed) might keep interest rates higher for longer than previously anticipated boost the Greenback broadly. The DXY currently trades near 104.02, adding 0.11% on the day.
Fed Chair Jerome Powell said on Sunday night that the central bank remains on track to cut interest rates three times this year. However, Powell reiterated that the Fed’s next meeting in March was likely too soon for a rate cut. Most economists think the first cut is likely to come in May or June.
Data released by the US Bureau of Labor Statistics (BLS) showed that the US Nonfarm Payrolls (NFP) for January rose to 353K from 333K in December (revised up from 216K). Additionally, the Unemployment Rate was unchanged at 3.7% in January. The Average Hourly Earnings climbed 4.5% YoY in January from 4.4% in the previous reading. After the report, the probability of a March rate cut has dropped to 19%, compared to 38% just a day ago, according to the CME FedWatch tool.
Furthermore, the US national security adviser, Jake Sullivan, said the US would take additional strikes and additional action in response to the Jordan drone attack that killed three soldiers last weekend. The rising tension in the Middle East could boost safe-haven flows and benefit the USD.
Moving on, market participants will monitor the January US ISM Services PMI, which is estimated to improve to 52.0 from 50.6 in December. Fed's Raphael W. Bostic is set to speak later on Monday. Traders will take cues from the data and find trading opportunities around the US Dollar Index.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.