Dollar Strengthens Slightly, Market Awaits US "Decisive Figures"
The dollar index (DXY) held around 98.5 on Wednesday, after posting gains in the previous session. This strengthening occurred as investors began to "position themselves" ahead of a series of US economic data that could influence expectations about the direction of the Fed's interest rate policy.
Today's market focus is on the release of the ISM Services PMI and JOLTS job openings data. After that, attention turns to weekly jobless claims on Thursday, followed by the December jobs report on Friday. These data typically trigger volatility in the dollar, gold, and stock markets.
Previously, ISM data showed that US manufacturing activity experienced its deepest contraction since 2024. This weakening signal makes the market increasingly sensitive to further data: whether the economy is indeed slowing sufficiently to require the Fed to cut interest rates immediately, or whether it is still sufficiently resilient.
Investors are also closely monitoring comments from Fed officials. Governor Stephen Miran said the central bank needs to cut interest rates aggressively this year to maintain economic momentum. But despite this statement, the market is currently pricing in an above 80% chance that the Fed will hold interest rates at its next meeting.
Externally, the dollar also received support as the euro weakened after inflation data in Germany and France came in softer than expected. The combination of "waiting for US data" and a depressed euro kept the dollar strong, at least until tonight's key figures are released.
Source: Newsmaker.id
