The US dollar extended its advance, with the Dollar Index climbing as much as 0.5%, while Treasuries softened as traders positioned themselves ahead of key US economic data. This data is expected to offer fresh insights into the Federal Reserve’s monetary policy trajectory.
Hawkish remarks from the Bank of Japan added another layer of complexity, driving volatility in global markets and lending additional support to the greenback. Investors have also been processing the potential implications of elevated inflationary pressures in the US, alongside lingering trade tensions. These factors have underpinned the dollar’s strength in recent weeks, further buoyed by market perceptions of an aggressive Federal Reserve stance.
President-elect Donald Trump’s reaffirmation of his “America First” economic policies also weighed on sentiment. His recent comments dismissing the idea of a BRICS-aligned currency to challenge the US dollar and reiterating threats of steep tariffs underscored his administration’s focus on reinforcing US economic dominance.
As markets digest these developments, traders will closely monitor upcoming US economic releases and the evolving narrative around inflation, trade policy, and global central bank strategies. The greenback’s resilience remains a key barometer of investor sentiment in an increasingly unpredictable macroeconomic landscape.