US Dollar gears up for last-minute PMI print of 2023

NEW YORK (December 29) The US Dollar (USD) is trading sideways for now on this last Friday of the year and the very last trading day of 2023. Looking back at its performance overall for this year, the Greenback has lost only around 3% Year-To-Date on the US Dollar Index (DXY) chart since its first opening in January. The big theme for 2024 going forward looks to be whether markets have been too eager to price in rate cuts for the US Federal Reserve, or has the Fed lost its control and made a policy error? 

On the economic front, traders can scalp the last pips of profit with the Chicago Purchase Managers Index (PMI) coming out this Friday. The Jobless Claims numbers from Thursday already triggered a small turnaround for the DXY. Should this Friday’s PMI numbers stay above 50 and even beat the expectation, the Greenback might make good on some earlier losses from this week. 

Daily digest Market Movers: The very final last for 2023

• Last data point for 2023 is printed near 14:45 GMT with the Chicago Purchase Managers Index. Expected is a decline from 55.8 to 51. A drop below 50, would mean contraction and will be substantially US Dollar negative, while either a beat of expectations or a print above the previous might see a very steep US Dollar rally in its turn. 
• On the geopolitical front Russia has started a new missile offensive against Ukraine with several key cities being bombarded, casualties rising by the hour. 
• Former US President Donald Trump will be placed back on the primary ballot in Colorado, though he is barred in the US State of Maine for the Primaries in March. 
• Equities are extending the Christmas spirit and are trying to eke out those last percentage points of gains. 
  • Officially Japan has already closed off for this year and saw the Topix close up near 28% for 2023. The Topix closed off just above 25% for 2023.
  • In China the Hang Seng Index was a bit of a let down for 2023, with the Index closing off down 13.82% for 2023.
  • In Europe the German Dax is currently up over 0.25% for this Friday with a nice 20% return for 2023.
  • In the US, Futures are all flat for this Friday, putting the Christmas rally on hold before going in the New Year. Overall for 2023, the Dow Jones is near 13% in the green for its overall performance, the S&P 500 near 25% profit and the Nasdaq around 44% gains. 
• The CME Group’s FedWatch Tool shows that markets are pricing in an 83.5% chance that the Federal Reserve will keep interest rates unchanged at its January 31 meeting. Around 16.5% expect the first cut already to take place. 
• The benchmark 10-year US Treasury Note trades near 3.87%, off the lows and sees a bit of a squeeze to the upside since Thursday.

FXStreet