The US dollar index rose 0.17% on Tuesday, the first trading day of 2024, as investors looked ahead to crucial economic data releases later this week. These include European inflation figures and the latest US jobs report on Friday, which could influence central bank policy.
The euro dipped 0.17% as data showed the currency bloc’s manufacturing sector contracted for the 18th straight month in December.
Markets now see an 86% chance of Fed interest rate cuts beginning in March, with over 150 basis points of easing expected this year. Minutes from the Fed’s December meeting will provide more insight when published on Thursday.
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The dollar hit 141.4 yen, up 0.43%, while sterling was flat at $1.2724 despite strong gains of 5% last year. Further advances may be unlikely given Britain’s weakening economy and election uncertainty.
Friday’s US non-farm payrolls data could continue this week’s dollar rally if it changes rate cut expectations.
