US Dollar Rises Against Trading Pairs in Forex Market
The US dollar (USD) rose against its major trading partners early Thursday, except for a decline versus the Japanese yen after a hawkish Bank of Japan comment. The dollar index, DXY, is roughly 2% off its recent highs, and the question for investors is whether a further 1-2% is required, ING analyst Chris Turner said in a note.
Driving this correction have been several factors, the largest of which has probably been this week’s tariff news, where it looks like the President Trump administration has been using tariffs for transactional, not ideological purposes—which analysts said may change in the second quarter.
Earlier Thursday, outplacement firm Challenger, Gray & Christmas reported that January layoffs intentions rose from December but were lower than a year ago and the smallest total for a January report since 2022.
Layoff intentions in the technology and retail sectors were the largest contributors in January, while business closings were the most cited reason.
USDEUR fell to 1.0361 from 1.0406 at the Wednesday US close and 1.0414 at the same time Wednesday morning. Eurozone retail sales fell more than expected in December, while Eurozone construction purchasing managers’ index increased in January but still indicates contraction, data released earlier Thursday showed. The next European Central Bank meeting is scheduled for March 5-6.
GBPUSD fell to 1.2376 from 1.2502 at the Wednesday US close and 1.2532 at the same time Wednesday morning. The Bank of England lowered its target rate by 25 basis points earlier Thursday, saying they will maintain a “gradual and careful” approach to rate cutting.
Two BoE members dissented in favor of a larger 50 basis point rate reduction. BoE Governor Andrew Bailey is due to speak at 9:15 am ET. The next Bank of England meeting is scheduled for March 20. Earlier Thursday, UK construction PMI was reported to have declined below the breakeven point in January.
USDJPY fell to 152.3948 from 152.7050 at the Wednesday US close and 152.8334 at the same time Wednesday morning. There were no Japanese data released overnight, but Bank of Japan board member Naoki Tamura said he believes the BoJ should raise interest rates to at least 1% in the second half of fiscal year 2025 from the current 0.5% rate, due to expected inflation. The next Bank of Japan meeting is scheduled for March 18-19.
USDCAD rose to 1.4353 from 1.4313 at the Wednesday US close and 1.4293 at the same time Wednesday morning. Canada leading indicators for January are scheduled to be released at 9:00 am ET, followed by the Canada IVEY survey for January at 10:00 am ET. Bank of Canada Governor Tiff Macklem is expected to speak at 5:00 pm ET. The next Bank of Canada meeting is scheduled for March 12. Yield Declines as Investors Bullish on Nigerian Bonds
