DXY Holds in the 99s, Fed Claims Data Key to "Hold"
The US dollar index (DXY) held in the 99s during Friday's Asian session, despite slightly weakening after strengthening in previous trading. The market now awaits further catalysts from the US Industrial Production release and comments from Federal Reserve officials, which could determine the dollar's direction heading into the weekend.
The dollar's main support came from Initial Jobless Claims data, which unexpectedly fell to 198,000 for the week ending January 10. This figure was lower than the market forecast of 215,000 and down from the previous week's revised 207,000. This data confirms that the wave of layoffs remains limited and the labor market remains resilient despite high interest rates.
This condition has further strengthened the market's confidence that the Fed does not need to rush to ease policy. Fed funds contracts reinforce the scenario of an interest rate hold in the near term, and the probability of a "hold" at the January 27-28 meeting is around 95% according to CME FedWatch.
Correspondingly, expectations for the next interest rate cut have also shifted to June or later. There were two reasons: stronger-than-expected employment data and concerns from Fed officials that inflation remained "sticky" and would take longer to return safely near target.
Market sentiment also improved after US President Donald Trump said he had no plans to remove Fed Chairman Jerome Powell and signaled a "hold on" approach regarding Iran. This combination eased market concerns on two fronts: the central bank's independence and the risk of geopolitical escalation.
On the trade front, the dollar received additional support from the US-Taiwan agreement aimed at bolstering semiconductor production in the US. This agreement was seen as positive for the manufacturing and supply chain investment narrative, while also providing the market with a reason to maintain the dollar's high position.
5 Key Points
DXY Holds in the 99s, Weakens Slightly in Asia
Jobless Claims Drop to 198,000 - Job Market Remains Solid
Probability of Fed Holding Rates (January 27–28) Around 95%
Rate Cut Expectations Shift to June+ Due to Still "Sticky" Inflation
Sentiment Boosted by Trump's Remaining Powell + "Hold on" Signal on Iran - US–Taiwan Deal (asd)
Source: Newsmaker.id
