USD and Bitcoin start the year strong while others struggle
The new year is marked by a strong US dollar and a resurgent bitcoin, according to Africa News.
After a 2% drop in 2023, the latest dollar index closed at 101.55, reflecting a 0.17% increase. Its rise draws attention towards upcoming US job data and European inflation figures which are expected to shed light on the prospective moves of central banks.
While the dollar soared, the euro fell by 0.17%, reflecting traders’ reactions to the 18th consecutive month of Eurozone manufacturing contraction. The Japanese yen also struggled, with the dollar gaining 0.43% at 141.4 yen.
The pound maintained its place at $1.2724, but UK economic and political uncertainties make a repeat of its 5% rise in 2023 highly unlikely.
Moves by the US Federal Reserve and European Central Bank are expected to react to economic data releases, due to be released this week. These include European inflation rates as well as US job openings data and non-farm payroll figures.
According to the CME FedWatch tool, the market is pricing in an 86% likelihood of Federal Reserve cuts to interest rates beginning in March. Over 150 points of easing throughout the year are also anticipated.
Standard Chartered macro strategist Nicholas Chia optimistically stated, “The positive sentiment from end-2023 may roll over into this week as all eyes turn to the US jobs report on Friday.”
This positive sentiment has been felt across sectors and positively influenced commodities and stocks on Tuesday. Kenneth Broux, a senior strategist at Societe Generale, pointed to the rising Australian dollar, Norwegian krone, and Mexican peso, to highlight the foreign exchange market’s upbeat start to the year.
The crypto market got off to a good start, with Bitcoin hitting a 21-month peak of $45,532. The surge is attributed to growing confidence in the US Securities and Exchange Commission moving to approve exchange-traded spot Bitcoin funds.
READ: Learning from FTX’s Cryptocurrency Fall
AFRICA NEWS/REUTERS
