As the new week unfolds, investors exhibit a cautious approach, reflected in the stable position of the US Dollar (USD) Index near 102.50, breaking a three-week losing streak. US stock index futures indicate a negative trend, while the European economic agenda is set to release key Retail Sales data for November and sentiment figures for December. The US Dollar gained strength on Friday following the release of the December jobs data, but some underlying aspects of the report have tempered its bullish momentum. The Nonfarm Payrolls (NFP) figure came in strong at 216,000, exceeding expectations significantly. However, the positive impact was somewhat diluted by downward revisions to previous months' NFP figures and a decline in the Labor Force Participation rate to 62.5%. Meanwhile, the 10-year US Treasury bond yield stabilized above 4%, contributing to a 1% weekly gain in the USD Index.
Performance of the US Dollar Over the Last Week
The table below illustrates the US Dollar's performance against major currencies over the past seven days, with notable strength against the Japanese Yen (JPY):
| Currency Pair | Percentage Change |
|---|---|
| USD/JPY | 1.22% |
| USD/EUR | 0.16% |
| USD/GBP | 0.88% |
| USD/CAD | 1.56% |
| USD/AUD | 2.25% |
| USD/NZD | 1.22% |
| USD/CHF | 1.03% |
Asian Equity Markets and Chinese Economic Concerns
In Asia, major equity indexes started the week with bearish sentiment, partly driven by the bankruptcy liquidation of Chinese wealth manager Zhongzhi Enterprise Group, reigniting worries about the property sector crisis. The Hang Seng Index and Shanghai Composite experienced declines of over 2% and 1%, respectively.
Currency Pair Movements
- EUR/USD: After a volatile Friday, the EUR/USD pair stabilized near 1.0950, ending the week with marginal losses. The pair remains steady in early Monday trading.
- GBP/USD: The GBP/USD pair closed the previous week almost unchanged and entered a consolidation phase just above 1.2700 on Monday.
- USD/JPY: The USD/JPY pair reached a multi-week high of 146.00 on Friday but retreated in American trading hours. Early Monday, the pair trades lower below 144.50, with investors awaiting Tokyo CPI data on Tuesday.
Gold Price Fluctuations
Gold prices reacted sharply to the US jobs report, initially plummeting below $2,030, but later regained ground to close the week near $2,050. As of early Monday, XAU/USD is under some pressure, trading below $2,040, as investors weigh the impact of US yields and other global economic factors.
The start of the week sees a cautious tone in the forex markets, with mixed economic data and geopolitical developments influencing investor sentiment. The US Dollar's performance, alongside the fluctuations in major currency pairs and gold, underscores the ongoing complexity in global financial markets. Market participants will likely continue to monitor upcoming economic releases and geopolitical events closely for further direction.
