US dollar rises after key data, ahead of Powell’s speech

The Dollar Index has seen a positive pace, trading with gains of 0.60% near the 103.50 area. The Fed is not ruling out further policy tightening, hinting at a moderately hawkish stance.

This is due to officials balancing the costs of doing too little and doing too much, as economic reports are giving mixed signals or not enough evidence of inflation coming down in the eyes of the Fed.

The US Dollar maintained a strong trading position on Thursday, favoring a sour market mood after the US PCE inflation figures and an uptick in yields. The annual PCE Price Index and Core PCE Price Index matched consensus expectations at 3% and 3.5%, respectively.

The weekly report from the US Department of Labor revealed Initial Jobless Claims for the week ending November 25 stood at 218K, slightly below the predicted 220K but higher than the previous figure of 211K.

The spotlight will be on the release of the Institute for Supply Management’s (ISM) Manufacturing PMI for November, with Chair Jerome Powell delivering a speech. US bond yields witnessed a rise, with numbers for 2-year, 5-year, and 10-year yields at 4.71%, 4.29%, and 4.34%, respectively.

In anticipation of the upcoming December meeting, the CME FedWatch Tool signals that markets have practically priced in a no hike and predict rate cuts in mid-2024.