The U.S. dollar experienced sharp swings but ended little changed ahead of the North American open, struggling to maintain momentum despite official "strong dollar" rhetoric. Mixed messages from Washington and a lack of surprise from the Fed left traders unconvinced, while geopolitical tensions near Iran propelled oil prices. Currency markets were marked by reversals and overextended moves in major pairs like EUR/USD and USD/JPY. Meanwhile, emerging markets saw diverging fortunes, and commodities like gold and silver continued their record-breaking rallies. Attention now turns to upcoming economic data for clearer directional cues.
Key Points :
Conflicting U.S. Messaging: The dollar initially firmed after Treasury Secretary Bessent reaffirmed support for a "strong dollar," but gains faded as traders weighed contradictory comments from other officials calling for lower rates and seeming unconcerned about recent dollar weakness.
Post-Fed Volatility Fizzles: Despite some swings following the predictable FOMC meeting, the dollar's early recovery momentum vanished by the close. It is now little changed overall as the North American session approaches.
Geopolitical Jitters Boost Oil: Rising Middle East tensions, with a U.S. military buildup near Iran, have sent oil prices to four-month highs, adding a risk layer to currency markets.
G10 FX Action: Major currencies saw choppy, range-bound trading. The euro dipped below $1.19 before recovering; sterling stalled near $1.3850; the dollar tested highs above ¥154 before pulling back; and the Aussie dollar failed to hold gains above $0.7095.
Emerging Market Mix: The Indian rupee hit a record low despite intervention, while the Brazilian real strengthened as the central bank signaled impending rate cuts. The offshore Chinese yuan and Mexican peso traded in tight ranges.
Commodities & Bonds Shine: Gold and silver extended record runs, and U.S. 10-year yields held firm at 4.25%. Equities mostly gained, except in parts of Asia.
Data & Central Banks in Focus: Upcoming U.S. trade and jobs data will fine-tune growth forecasts after strong Q4 GDP. The Bank of Canada held rates as expected, while Eurozone money supply growth slowed slightly.
