Despite being hit by the decline in US Bond Yields and the release of disappointing data, the US Dollar was stable while awaiting the results of next week's FOMC meeting.
The US dollar was quite stable despite weak US Treasury bond yields and unsatisfactory US economic data. In the early Friday (21/January) trading session, the US Dollar Index traded at 95.73, holding on to its 3-day high.
The yield on the US 10-year bond dipped from 1.902% to 1.305%. The weekly Jobless Claims data also did not show encouraging results, as it actually increased to 286K although it is expected to decline to 227K.
"Even with the same noise in the Jobless Claims figures, there appears to be a reflection of the record rise in cases of the Omicron variant of COVID-19," said Robert Frick, economist at Navy Federal Credit Union. then hold on, then Jobless Claims should drop dramatically in the next two or three weeks."
Another economic report released in the US tonight is Existing Home Sales data with yields down 4.6% in December. Sales data weakened from 6.48 million to 6.18 million housing units.
Analysts Begin to Doubt US Dollar Bullish
Although the US Dollar is expected to be bullish this year, some analysts are starting to show doubts. One of them is Marc Chandler, analyst at Bannockburn Forex in New York. "The US dollar has softened this year... The US economy is going through some strong winds, and that's why I'm not as progressive as people at the Fed are," Chandler said.
According to him, a lot of monetary tightening is coming, and the economy actually looks a little more fragile than expected. This puts the US Dollar at risk of a heavier second half than the first half of the year.
"The big focus will be next week's FOMC meeting. Markets will probably be cautious ahead of the weekend, and that's because of geopolitical uncertainty at the Ukrainian border," Chandler added.
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