Dollar Stays Strong as Doubts About Fed Rate Cuts Grow
The dollar rose on Monday, driving its peers to multi-year lows, after Friday's blowout U.S. jobs report underscored economic strength and fueled growing doubts about the Federal Reserve cutting interest rates this year.
The dollar index, which measures the greenback against a basket of currencies, rose 0.26% to 109.94. Earlier in the session it surged to its highest in more than two years, peaking at 110.17 and extending the recent rally.
U.S. jobs growth unexpectedly accelerated in December and the unemployment rate fell to 4.1%, leaving traders heavily scaling back bets of rate cuts this year.
Markets are pricing in a 25 basis point cut from the Fed for December, after not fully pricing one in for 2025.
With Wednesday's U.S. inflation report up next, any upside surprise could further close the door on future easing. A slew of Fed officials are also due to speak this week.
President-elect Donald Trump returns to the White House on Monday. His plans for hefty import tariffs, tax cuts and immigration restrictions could stoke inflation, adding to expectations of a less aggressive easing cycle.
The euro , down 0.4% at $1.0208, earlier in the session hit its weakest level against the dollar since November 2022. Sterling was last down 0.24% at $1.2167, after sliding to a 14-month low earlier in the day.
The pound has been under pressure from concerns over rising borrowing costs and growing unease over Britain's finances. It tumbled 1.8% last week.
After sinking to its weakest since April 2020, the Australian dollar was up 0.13% at 0.615. The New Zealand dollar edged up 0.07% to $0.5559, staying near a more than two-year low.
The dollar is down 0.03% against the yen at 157.7. The yen's decline was mitigated by news that Bank of Japan policymakers could raise their inflation forecast at a policy meeting this month as a prelude to hiking rates again.
Source : Reuters
