FX.co ★ Dollar Strengthens to One-Month High

The dollar index climbed to 98.9 on Thursday, marking its highest point since December 9, as investors evaluated a mix of US economic data and reconsidered the Federal Reserve's policy direction. Last week, initial jobless claims saw a slight increase to 208,000, while job cuts in December dropped to 35,553, the lowest figure since July 2024. This data suggests a robust labor market and alleviates fears of an impending slowdown. Meanwhile, the trade deficit sharply decreased to $29.4 billion in October, the smallest since June 2009 and significantly below the predicted $58.1 billion. This reduction was due to imports falling to a 21-month low and exports hitting a record high amidst tariff-related fluctuations. The focus now shifts to Friday’s December employment report for additional insights into labor market conditions. Currently, markets are pricing in nearly a 90% chance that the Fed will maintain steady rates, although traders still anticipate several rate cuts later this year.