Dollar builds on previous day’s gains as focus turns to U.S. data

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Dollar builds on previous day's gains as focus turns to U.S. data

The U.S. dollar went up again on Wednesday after going up the day before. High U.S. Treasury yields and a cautious tone that hurt Wall Street supported the dollar.

Japanese markets were closed for a holiday, and buyers were waiting for important U.S. economic news later in the day, such as minutes from the Federal Reserve’s December meeting. Trading was pretty slow.

It had dropped 0.2% against the dollar and was worth $1.092, which was its lowest level since December 19. Tuesday was the worst day for it since July, when it fell 0.95%.

The dollar index, which compares the dollar to six other important currencies, went up 0.22% to 102.47, adding to Tuesday’s 0.86% rise.

A drop in inflation and a dovish tone at the Federal Reserve’s policy meeting in December made people more likely to bet that the U.S. will cut interest rates in 2024. This hurt the dollar and caused Treasuries and stocks to rise in November and December. Last week, the dollar index hit its lowest point in five months, at 100.61.

Those trends didn’t carry over into the new year. The S&P 500 and Nasdaq Composite both closed down on the first trading day of 2024, with big tech companies being the main culprits. When prices of Treasury bonds dropped, yields went up. This made U.S. debt more appealing and pushed the dollar higher on Tuesday.

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