Dollar Gains on Weakness in the British Pound and Yen

Group 1: Dollar Index and Market Reactions - The dollar index (DXY00) is up by +0.17%, driven by weakness in GBP/USD and the yen, as UK consumer prices rose less than expected and Japanese fiscal concerns weigh on the yen [1] - The dollar is under pressure due to the Fed's liquidity boost, with the central bank purchasing $40 billion a month in T-bills starting last Friday [2] - Markets are concerned about President Trump's potential appointment of a dovish Fed Chair, which could negatively impact the dollar [2] Group 2: Federal Reserve Insights - Fed Governor Christopher Waller described the US labor market as "pretty soft" with close to zero job growth, while inflation remains "pretty well anchored" around 2% [3] - Interest rates are still 50-100 basis points above neutral, allowing the Fed to lower them steadily without urgency [3] - The market is pricing in a 24% chance that the FOMC will cut the fed funds target range by 25 basis points at the upcoming January 27-28 meeting [3] Group 3: Eurozone Economic Indicators - The euro (EUR/USD) is down by -0.04% due to a stronger dollar and negative Eurozone economic news, including a downward revision of November CPI and the smallest increase in Q3 labor costs in three years [4] - The unexpected decline in the German December IFO business conditions survey to a 7-month low is also bearish for the euro [4] - Divergent central bank policies support the euro, as the Fed is expected to continue cutting rates while the ECB is seen to have completed its rate-cutting campaign [5] - Eurozone November CPI was revised downward to +2.1% year-on-year from +2.2% year-on-year [5]