Dollar Off Weekend Highs
The U.S. dollar weakened on Friday but remained on track for a strong weekly performance, boosted by expectations of better U.S. economic performance and thus fewer Federal Reserve interest rate cuts this year.
At 4:20 AM ET (09:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.3% lower at 108.900, retreating after hitting a more than two-year high during the previous session.
The index was on track for a weekly gain of about 1%, which would be its best weekly performance in more than a month, as traders continued to price in a more aggressive Fed and a resilient U.S. economy.
December U.S. manufacturing activity data, as measured by S&P Global, came in stronger than expected on Thursday, setting the stage for the Institute for Supply Management’s much-watched release later in the session.
The reading is seen edging down to 48.2 last month, down from a five-month high of 48.4 in November. It is the eighth straight month that the reading has been below the 50-point threshold, although it remains above the 42.5 level that the ISM says indicates broader economic expansion.
Markets will also be looking ahead to the crucial monthly jobs report due later next week, with the Fed’s next meeting due later this month.
“Markets are fully pricing in a January hold,” analysts at ING said in a note. “If the dot chart is indeed a benchmark for rate expectations for the next three months, the bar for a data surprise that seriously threatens the dollar’s outsized rate advantage will be set higher.”
Source: Investing.com
