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02/01/25
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USD Soars as Wall Street Dips: Market Update for January 2024
The US Dollar (USD) Index experienced a notable increase of over 2.5% in December, marking its third consecutive month of gains. Since the start of the new year, the index has entered a consolidation phase, hovering just below a 26-month peak that surpassed the 108.50 level on the final trading day of 2024. Upcoming data releases on the US economic calendar are expected to include weekly Initial Jobless Claims and December’s Challenger Job Cuts figures.
In contrast to the dollar’s strength, major stock indices on Wall Street recorded significant declines as 2025 approached, subsequently driving demand for the USD. However, early trading on Thursday saw US stock index futures reflecting a potential recovery, suggesting a shift towards a more positive market sentiment.
The euro faced a setback, with the EUR/USD pair declining approximately 0.5% on Tuesday and closing December below the 1.0400 level. As trading resumed on Thursday, the pair found itself fluctuating within a tight range just above 1.0350. Additional revisions to the HCOB Manufacturing PMI data for both the Eurozone and Germany are anticipated within the session.
Meanwhile, GBP/USD concluded the first two trading days of the week in the red but remains above the 1.2500 level as Thursday progresses.
In Asia, data from China revealed a decrease in the Caixin Manufacturing PMI, dropping to 50.5 in December from 51.5 in November, falling short of market expectations. Despite this disappointing report, the AUD/USD pair saw an uptick, rising nearly 0.5% during Thursday’s trading to settle at 0.6215.
Gold prices faced slight declines in the lead-up to the New Year, yet managed to stabilize above the $2,600 level, trading around $2,630 at the beginning of the European session. The USD/JPY pair peaked above 158.00 after the holiday but has since corrected downward, trading roughly 0.3% lower on Thursday and below the 157.00 level.
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