The dollar remains on a positive trajectory for a third week in a row, with the dollar index (USDX) adding approximately 1% to its value in the past week, trading close to levels last seen early in December. The move is backed by Friday’s reports as the Michigan University preliminary consumer sentiment report came in better than expected, marking the highest reading since July 2021, adding to signs of resilience in the US economy.
On Friday, several Fed officials expressed their concerns on early rate cuts, among which Chicago Fed President Austan Goolsbee, who said weeks more of inflation data need to be in hand before any decision could be made to cut interest rates. In addition, Federal Reserve Bank of San Francisco President Mary Daly said there is still a lot of work left to do on inflation and it is premature to think rate cuts are around the corner.
Gains in the dollar and signs of resilience in the US economy and rising treasury yields continue to add pressure on gold prices, with the precious metal losing around 1% of its value in the past week. However, the decline in gold remains limited due to its safe haven properties, as geopolitical turmoil in the Middle East continues.
The main US stock market indices all ended in gains for yet another week, posting fresh all-time highs daily, with investors now focusing on fourth quarter earnings in the technology sector and the direction of the U.S. dollar. In company news, United Airlines publish their quarterly earnings today while later this week, some major players such as Tesla, General Electric, Netflix, IBM, Intel, Visa and American Express will also release their quarterly data.
For Monday, some price action could be seen later in the session, upon the release of the CB Leading Index from the U.S. Later this week, the focus could shift towards the ECB and BOJ interest rate decisions as well as US advanced GDP data and the Core PCE Price index that is considered to be the Fed’s favorite gauge for inflation.
US 500
U.S. stocks were higher after the close on Friday, as gains in the Technology, Financials and Telecoms sectors led shares higher.
At the close in NYSE, the US 30 gained 1.03% to hit a new all-time high, while the US 500 climbed 1.16%, and the US Tech 100 1.70%.
Apple , Google , Microsoft and Meta led the gains in big tech as investors continued to load up on megacap tech amid ongoing optimism that growing demand for artificial intelligence will continue spur growth.
The University of Michigan's preliminary consumer sentiment index jumped by more than expected to a reading of 78.8 in January, the highest since July 2021.