US dollar strengthens amid data releases
Daily Currency Update
The US Dollar Index (DXY) climbed from 103.183 to 103.427 today following the release of key economic figures. The fourth-quarter Gross Domestic Product (GDP) data showed an increase at an annual rate of 3.3%, lower than the previous quarter's 4.9% but higher than the forecasted 2.3%. According to the U.S. Bureau of Economic Analysis, US Durable Goods remained unchanged at 295.6 billion in December, compared to the previous month's 5.5% increase. The Initial Jobless Claims for the week ending on January 20th came in at 214,000, up by 25,000 from the revised level of 189,000 the week prior. Currently, the market reflects a nearly 97% probability that the Federal Reserve will maintain interest rates at 5.5% next week, with a 46% chance of rates dropping by 0.25% in March.Key Movers
The euro declined from 1.08983 to 1.08334 against the US dollar this morning as the European Central Bank (ECB) decided to maintain its policy rate at 4.5%. The ECB Governing Council explained that the decision to keep key interest rates unchanged was based on the medium-term inflation outlook, which indicated a downward trend. This confirmed the effectiveness of the ECB's strategy to curb inflation by keeping rates elevated. The ECB remains dedicated to achieving its target inflation rate of 2%.After the release of significant US economic data, the pound dropped to 1.27011 today. With the US data showing an expanding US economy at an annual rate of 3.3% in the fourth quarter, the pound couldn’t keep up with the USDs strength. The Bank of England (BoE) is expected to maintain interest rates at 5.25% in its meeting on February 1.
USD/CAD hovered around 1.3501 this morning, supported by positive economic data for both the US and Canadian dollars. In the US, today's release of GDP data, indicating a 3.3% growth, contributed to the upward movement of the currency pair. Conversely, the Canadian dollar, driven largely by commodities, benefited from the rise in oil prices. West Texas Intermediate (WTI) crude oil approached a two-month high at approximately 76.369. The surge in oil prices can be linked to a decrease in US crude stocks and ongoing geopolitical tensions in the Middle East. The Bank of Canada (BoC) opted to maintain rates at 5%, noting a decline in inflation amid ongoing economic growth deceleration.
Expected Ranges
- EUR/USD: 1.0829 - 1.0906 ▼
- GBP/USD: 1.2695 - 1.2753 ▼
- AUD/USD: 0.6568 - 0.6608 ▼
- USD/CAD: 1.3476 - 1.3534 ▲