Noor Trends News, Technical Analysis, Educational Tools and Recommendations
The U.S. dollar held firm on Thursday, bolstered by hawkish Federal Reserve minutes and strong economic data that fueled expectations of a slower pace of rate cuts in 2025. Global currencies, however, faced mixed fortunes due to varying economic and policy dynamics.
Key Highlights
Dollar Holds Ground Amid Strong Yields
- Dollar Index: The Dollar Index traded at 108.920, close to a two-year high.
- Treasury yields climbed, with the 10-year U.S. Treasury note hitting its highest level since April, reflecting concerns over persistent inflation and robust labor market data.
- Federal Reserve minutes revealed policymakers are inclined to moderate rate cuts in 2025 due to renewed inflationary pressures.
- Concerns over the incoming Trump administration’s economic policies further influenced sentiment.
Euro Struggles as German Weakness Lingers
- EUR/USD: The euro slipped 0.1% to 1.0306, nearing a two-year low.
- Despite better-than-expected German exports (+2.1%) and industrial production (+1.5%) in November, weak demand and a cautious economic outlook weigh heavily on sentiment.
- The ECB is expected to lower interest rates by 100 basis points in 2025, adding to bearish pressure on the euro.
Pound Drops Amid Bond Market Worries
- GBP/USD: The British pound fell 0.5% to 1.2296, its weakest since April.
- Concerns over the UK bond market, as yields on government bonds reached multi-year highs, undermined the pound’s performance.
Chinese Yuan Pressured by Weak Inflation Data
- USD/CNY: The Chinese yuan weakened by 0.3% to 7.3542, hovering near its weakest level in 17 years.
- December inflation data showed consumer prices barely grew, while producer prices shrank for the 27th consecutive month, underscoring China’s persistent disinflationary trend.
- These figures highlight Beijing’s need for additional measures to boost economic activity.
Japanese Yen Finds Support in Wage Data
- USD/JPY: The yen edged 0.2% higher to 158.08, buoyed by better-than-expected November wage growth data.
- Rising wages in Japan could foster a virtuous economic cycle, giving the Bank of Japan room to tighten monetary policy sooner than anticipated.
Looking Ahead
With U.S. markets closed for former President Jimmy Carter’s state funeral, trading activity may remain subdued. However, persistent global economic concerns—ranging from inflation pressures in the U.S. to economic stagnation in Europe and Asia—are likely to drive forex market volatility in the coming weeks.
Key areas to watch include further developments in Fed policy, ECB interest rate signals, and China’s economic stimulus measures.
