After weakening in early trading in the week following the conflicting reports regarding Donald Trump's tariff plan, the US dollar managed to show a strengthening again in the New York session yesterday.
This was driven by the release of the latest economic data from the United States (US) which was encouraging involving economic activity and the labor market.
The US ISM services PMI data for December 2024 recorded a higher figure of 54.1 compared to the forecast of 53.5.
Following last week's manufacturing reading which also increased, this data showed an expansion reading above the 50-point mark for the 10th time in the past year.
Adding further support for the US dollar was when the JOLTS employment data presented a strong figure for the reading last November with the number of job openings increasing by 259,000 to 8.1 million for a 6-month high in addition to beating the forecast figure.
These positive data are seen as increasingly supporting the Federal Reserve (Fed)'s plan to slow its monetary policy easing as signaled at the FOMC meeting last December.
The strengthening of the US dollar has reduced the losses experienced on Monday, but investors will remain cautious in the atmosphere of the transition of the new administration in America in early 2025.
The market is assessing the scenario of the implementation of Trump's tariff policy, which has the potential to boost inflation again while limiting the Fed from lowering interest rates.
Trump earlier in the week denied a news report issued by the Washington Post that Trump's tariffs would focus on critical imports only.
The December ADP employment data will be the focus in the New York session tonight, which will measure the increase in private employment in America and will also provide an early signal for the NFP report at the end of the week.
Also published along with US unemployment benefit claims data for last week's reading.
