US dollar (USD) Market Update
The US dollar (USD) has demonstrated resilience in recent trading sessions, buoyed by a risk-off sentiment that has channeled safe-haven flows into the currency. Despite weaker-than-anticipated retail sales data, which noted a modest growth of only 0.4% in December, the dollar managed to sustain earlier gains. Economists suggest that the prevailing market mood continues to favor the USD, particularly as investors remain vigilant ahead of critical economic indicators, including industrial production figures and the forthcoming non-farm payrolls report. The prospect of robust job growth could further bolster the greenback’s standing in the currency market.
A notable factor supporting the USD is the market's positive reaction to Donald Trump's policies, which are expected to drive inflation and maintain higher interest rates, despite his verbal inclination towards a weaker dollar. FX analysts point out that expectations surrounding Trump's fiscal measures, including tax reductions and potential tariffs, have heightened Treasury yields, contributing to the dollar's strength. Notably, the USD has surged to 0.9609 against the Euro, marking a 1.0% increase above its three-month average, while it remains 2.3% above its average against the British pound at 0.8105. The stability of USD/JPY around 155.8, just a shade above its average, reinforces this trend and suggests that the dollar may have further room to climb, as market participants anticipate upcoming economic data will provide additional support for this upward momentum.
