US Economic Data and Fed Signals Keep Dollar Mixed
On the fundamental side, the Institute for Supply Management (ISM) reported that the US Services PMI surged to 54.4 from 52.6 in November. It has beaten expectations of 52.3, suggesting the services sector is growing steadily. However, job market data showed some weakness.
Meanwhile, JOLTS Job Openings dropped to 7.146 million in November, which is under the expected 7.6 million. This indicates fewer available jobs.
Similarly, the ADP Employment Change showed an increase of 41,000 jobs, slightly below the expected 47,000, following a small decline in November. This mixed economic data could keep the US dollar steady, with just a small chance of rising.
Meanwhile, Fed officials signaled caution for the US economy. Fed Governor Stephen Miran mentioned the need for aggressive interest rate cuts this year to support growth. Minneapolis Fed President Neel Kashkari warned that unemployment could rise faster than expected.
Hence, the cautious signals from Fed officials, along with hints of aggressive rate cuts, are likely to weaken the US dollar, as lower interest rates make it less attractive to investors seeking higher returns.
