The US dollar is keeping a stable course during the quiet holiday trading on Friday. In the face of weak industrial data from China and Japan, the dollar is showing resilience. The US dollar index (DXY) remains near a two – year high, although it has slipped below 108.00.
The trading atmosphere on Friday was calm, with the US dollar trading steadily. Japan’s monthly industrial production fell by 2.3%, less than the expected 3.5%, and Chinese manufacturers reported declining profits. These factors put pressure on the dollar.
The US economic calendar on Friday was light, with the release of the preliminary Goods trade balance and wholesale inventories data. The goods trade balance in November showed a wider deficit of 102.9 billion USD compared to the previous month’s 98.7 billion USD, and the estimate of 100.8 billion USD was also exceeded. The wholesale inventories shrank by 0.2% in November, in line with the previous month’s figure and the consensus estimate.
Equity markets were mixed on Friday, with all US equity futures trading lower. The Nasdaq lost over 1%. The CME FedWatch Tool for the first Fed meeting in 2025 on January 29 indicates an 89.3% chance of a stable policy rate, with a 10.7% chance of a 25 – basis – point rate cut. The US 10 – year benchmark rate is at 4.59%, close to this week’s high of 4.64%.
Regarding the US dollar index, due to low liquidity and the holiday period, it’s not expected to make significant moves. A trend line starting from December 28, 2023, acts as a moving cap. The next firm resistance is at 109.29, which was the peak on July 14, 2022. Once this level is breached, the 110.00 round level comes into play. On the downside, the first barrier at 107.35 has turned from resistance to support. The second level that could stop any selling pressure is 106.52, and even 105.53 could be considered, with the 55 – day Simple moving average (SMA) at 105.83 moving towards that level.
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