Dollar Awaits Fed Signals
The dollar index (DXY) held steady above 98 on Wednesday, but remained near its lowest level in more than two months. This indicates the dollar hasn't fully recovered, as markets remain uncertain following the mixed US jobs data.
The previously delayed jobs report showed November payrolls rose more than expected. However, the October data was revised down sharply, and the unemployment rate rose to 4.6%, its highest level since 2021. This combination leads the market to view the US employment as slowing, rather than suddenly improving.
Because the data wasn't "decisive," Fed policy expectations haven't changed much. The market still rates around a 75% chance the Fed will hold interest rates at its January meeting, roughly the same as before the data release.
The focus now shifts to comments from Fed officials scheduled to speak on Wednesday, including Christopher Waller and John Williams. The market is hoping for clearer clues as to whether the Fed still sees room for another rate cut or will instead be more cautious.
Besides official speeches, this week's main focus is the November US consumer inflation (CPI) data, released Thursday. This is key, as inflation is the primary "fuel" for interest rate decisions. A hotter-than-expected figure could boost the dollar, while a more subdued inflation figure could put further pressure on the greenback.
Outside the US, markets are also awaiting interest rate decisions from other major central banks this week, including the Bank of Japan, the Bank of England, and the European Central Bank. The combination of US data and global central bank decisions has the potential to make the dollar even more sensitive and susceptible to sharp swings.
Source: Newsmaker.id
