Strong jobs data will certainly further raise expectations for Fed rate hikes in March and the months after that. The U.S. economy still seems robust and the dollar's upward trend is likely to continue.
Japanese investors are still looking for higher yields overseas. That's weighing on the yen.
With the huge amount of money that Japanese sent abroad, repatriation flows could have a major effect on the dollar-yen through March.
The dollar remains firm, as the absolute U.S. interest- rate advantage still continues to exist. Rates hikes by the BOJ are a long way off.
Strong figures will boost expectations of higher growth in consumer spending in the U.S.. That will heighten expectations of at least two more rate hikes from the Fed, supporting the dollar.
The market focus is surely on the interest-rate differentials between the U.S. and other major economies, including Japan. The Bank of Japan won't raise its interest rate any time soon, so the yen will remain the most bearish for the foreseeable future, while the dollar will be the most bullish.
Some investors will use strong consumer confidence data as a reason to buy the dollar. The figures will likely show the U.S. economy is still robust enough for the Fed to keeping rates next year.
Investors will become focused on the interest-rate differential story this week. Strong U.S. economic figures will reinforce the view the Fed will keep raising rates, giving a boost to the dollar.
Copyright © 2024 Electric Goat Media. All Rights Reserved.