On Friday, November 22nd, the US Dollar Index hovered near a 13-month high, continuing its recent upward trend. As of 12:38 Beijing time, the index stood at 107.05, hitting a new high for 2023, thanks to an unexpected drop in US unemployment claims and hawkish comments from Federal Reserve officials. Meanwhile, Bitcoin prices also continued to rise, breaking through historical highs and nearing the $100,000 mark.
Dollar Index Surpasses 107, Reaching a Yearly High
On Thursday, the Dollar Index rose for a second consecutive day, increasing by 0.44% and 0.27%, and successfully surpassing the 107 mark to hit an annual high of 107.15. Dollar Index futures also rose by 0.09%, closing at 107.03. Multiple factors contributed to the dollar's strength, including robust US employment data and the Fed's cautious stance on rate cuts.
The latest data shows initial US jobless claims fell to a seven-month low of just 213,000, below the expected 220,000. This suggests that after the temporary effects of hurricanes and strikes, US job growth in November may rebound. Investors are closely watching next month's non-farm payroll report, which could influence the Fed's policy direction at its December meeting.
US bond yields also support the dollar. At the time of writing, the yield on the 10-year US Treasury was 4.415%, and the 20-year Treasury yield was 4.677%.
Fed Policy Becomes Market Focus
Whether the Fed will cut rates again in December has become a key focus for the market. The expectation for a rate cut has cooled significantly; according to CME's FedWatch tool, the probability of a 25 basis point cut in December has dropped from 72.2% a week ago to 57.8%. This week, several officials, including Fed Chair Powell, hinted that the central bank might take a more cautious approach to rate cuts.
Additionally, investors will closely watch the US Core PCE data for October set to be released next Friday, November 29th. This data is one of the key indicators for the Fed's inflation target and could significantly impact monetary policy decisions.
The Euro Continues to Weaken Under Multiple Pressures
The Euro, which holds the largest weight in the Dollar Index, is struggling, currently stabilizing at 1.0472, nearing the 13-month low reached on Thursday. The Euro's recent weakness is not only due to the strong dollar but also unfavorable internal factors in Europe, including the intensifying Russia-Ukraine conflict, political uncertainty in Germany, and sluggish economic recovery in Europe.
Bitcoin Reaches a Historical High, Nearing $100,000
At the same time, Bitcoin prices continued to climb on Friday, reaching a historic peak of $99,289.3, just shy of the $100,000 mark. At the time of writing, Bitcoin was valued at $99,012.2, having surged over 40% since the US election. The market widely anticipates that the new president will relax cryptocurrency regulations, further boosting Bitcoin demand.
Market Outlook
The strong performance of the Dollar Index is expected to persist, but uncertainties regarding Fed policy and upcoming economic data could lead to market fluctuations. Meanwhile, instability in Europe will continue to affect the Euro, and Bitcoin's surge highlights the market's confidence in cryptocurrencies. Investors should closely monitor upcoming economic data and policy changes to seize market opportunities.
