Dollar edges higher ahead of data; sterling weakens
The US dollar strengthened slightly on Tuesday (February 17th) as US investors returned from the holiday break, while much of Asia remained quiet due to public holidays. The Dollar Index (DXY) rose 0.2% to 97.010, extending its 0.2% gain from the previous session, as trading returned to normal after the George Washington Day break.
The dollar's gains were seen as emerging from a relatively quiet day, with market participants beginning to tidy up their positions ahead of a series of important releases. The focus was on the Fed's meeting minutes (Wednesday), which followed the central bank's decision to hold interest rates and emphasize that inflation and labor market risks still needed to be monitored, especially as the latest payrolls and inflation data provided mixed signals.
Today, the market also awaited indicators that could spark intraday volatility: ADP payrolls and the Empire State Manufacturing Index. After that, the main focus this week shifted to Friday's PCE data—the Fed's favorite inflation indicator, which the market often uses to gauge medium-term interest rate direction.
In Europe, sterling weakened, with GBP/USD falling 0.3% to 1.3594 after data showed continued weakness in the UK labor market. The unemployment rate rose to 5.2% (three months to December) from 5.1%, while wage growth (excluding bonuses) slowed to 4.2% from 4.5%. This combination reinforced speculation that the Bank of England's interest rate cut room would be wider if the trend continued.
Meanwhile, EUR/USD fell slightly to 1.1846 ahead of the release of the German ZEW sentiment index, which is expected to improve. However, the market still believes the dollar has room to recover in the short term if US data is supportive, potentially allowing the euro to retest the psychologically low area.
In Asia, USD/JPY fell 0.3% to 152.94 as the yen recovered slightly after being hit by weak Japanese fourth-quarter GDP data. The yen also received support from speculation that the Bank of Japan could raise interest rates as soon as April.
Elsewhere, USD/CNY remained relatively stable at 6.9087 with Chinese markets still closed, while AUD/USD edged lower to 0.7068 after RBA minutes showed the central bank had not yet committed to further tightening—though it remained wary of persistent inflation. (yds)
Source: Newsmaker.id
