Dollar Rises on First Trading Day of the Year, Bitcoin Rallies
On the first trading day of the year, the dollar saw a rise as investors turned their attention to upcoming U.S. jobs data and European inflation numbers. These data releases may provide clues on the next moves of central banks. The dollar index, which measures the U.S. currency against six rivals, was up 0.17 percent at 101.55. This comes after a 2 percent decline in 2023, breaking a two-year streak of gains as investors considered the possibility of rate cuts by the Federal Reserve.
Meanwhile, the euro dipped 0.17 percent as traders analyzed data showing that eurozone factory activity contracted for the 18th consecutive month in December. The Japanese yen also struggled, with the dollar up 0.43 percent at 141.4 yen.
This week, a range of economic data is set to be released, including European inflation data and U.S. data on job openings and non-farm payrolls. These figures will shape market expectations regarding monetary policy moves from the Federal Reserve and the European Central Bank.
According to the CME FedWatch tool, markets are currently pricing in an 86 percent chance of interest rate cuts by the Fed starting in March. It is anticipated that there will be over 150 basis points of easing throughout the year.
Minutes from the last Fed meeting in December are scheduled for release on Thursday, providing further insight into the central bankers’ thinking.
“The positive sentiment from the end of 2023 may carry over into this week as all eyes turn to the U.S. jobs report on Friday,” said Nicholas Chia, macro strategist at Standard Chartered.
This positive sentiment has also had a ripple effect on commodities, stocks, and currencies. Kenneth Broux, senior strategist FX and rates at Societe Generale, noted that FX markets have started 2024 in a positive mood, pointing to gains in the Australian dollar, the Norwegian crown, and the Mexican peso.
In Japan, rescue teams are facing difficulties reaching isolated areas affected by a powerful earthquake on New Year’s Day. Reports indicate that nearly 50 people have died, and buildings have been toppled, leaving thousands of homes without power.
Sterling remained flat on the day at $1.2724. Although it had a strong performance in 2023 with a 5 percent gain, a weakening economy and election uncertainty make a repeat performance unlikely.
The cryptocurrency market had an impressive start to the year, with bitcoin reaching a 21-month peak of $45,532. This surge is fueled by rising expectations that the U.S. Securities and Exchange Commission will soon approve exchange-traded spot bitcoin funds.
