The dollar index (DXY00) rallied to a 3.5-week high on Thursday and finished up by +0.19%.  Stronger-than-expected US economic news on Thursday boosted the dollar, as weekly jobless claims fell to a 5-week low, and the Feb Philadelphia business outlook survey unexpectedly rose to a 5-month high.  The dollar also has some positive carryover from Wednesday, when the hawkish minutes of the Jan 27-28 FOMC meeting stated that "several" officials suggested the Fed may need to raise interest rates if inflation st ...

Economic Indicators - The dollar index (DXY00) increased by +0.17%, reaching a 4-week high, driven by positive US economic news [1] - US job cuts in December fell by -8.3% year-over-year to 35,553, marking a 17-month low, indicating a supportive factor for the labor market [2] - Weekly initial unemployment claims rose by +8,000 to 208,000, which was better than the expected 212,000, suggesting a stronger labor market [3] - Q3 non-farm productivity rose by +4.9%, close to the expected +5.0%, representing the largest increase in 2 years [3] - Q3 unit labor costs fell by -1.9%, a larger decline than the expected -0.1% [3] - The US trade deficit unexpectedly shrank to -$29.4 billion, significantly better than the expected widening to -$58.7 billion, marking the smallest deficit in 16 years [3] Market Expectations - Markets are currently pricing in a 12% chance of a -25 basis point rate cut at the FOMC's next meeting on January 27-28 [4] - The Federal Reserve is expected to cut interest rates by about -50 basis points in 2026, while the Bank of Japan is anticipated to raise rates by +25 basis points in the same year [4] Dollar Dynamics - The dollar is under pressure due to the Fed's liquidity boost, having started to purchase $40 billion a month in T-bills since mid-December [5] - Concerns regarding President Trump's potential appointment of a dovish Fed Chair are also bearish for the dollar, with Kevin Hassett being the most likely candidate [5] Eurozone Impact - The EUR/USD pair fell to a 4-week low, down by -0.03%, influenced by the strength of the dollar and unexpected declines in Eurozone economic confidence [6] - Easing producer price pressures in the Eurozone, following the steepest decline in 13 months, are seen as dovish for ECB policy, further weighing on the euro [6]

Economic Indicators - US nonfarm payrolls are expected to increase by +70,000 in December, with the unemployment rate projected to decrease by -0.1% to 4.5% [1] - Average hourly earnings for December are anticipated to rise by 0.3% month-over-month and 3.6% year-over-year [1] - October housing starts are forecasted to increase by 1.8% month-over-month to 1.33 million, while building permits are expected to rise by 1.5% month-over-month to 1.35 million [1] Trade and Productivity - The US trade deficit unexpectedly shrank to -$29.4 billion in October, significantly better than the expected widening to -$58.7 billion, marking the smallest deficit in 16 years [2] - Q3 nonfarm productivity rose by +4.9%, close to expectations of +5.0%, representing the largest increase in two years [2] - Q3 unit labor costs fell by -1.9%, exceeding expectations of a -0.1% decline [2] Stock Market Performance - The S&P 500 Index is down -0.15%, while the Dow Jones is up +0.16%, and the Nasdaq 100 Index is down -0.67% [5] - Defense stocks are rallying following President Trump's announcement of plans to increase military spending to $1.5 trillion, with Northrop Grumman up more than +10% [4][14] - Chipmakers and software stocks are experiencing declines, with notable losses in companies like Sandisk and Autodesk, which are down more than -5% [11][12] International Markets - Overseas stock markets are generally lower, with the Euro Stoxx 50 down -0.22%, China's Shanghai Composite down -0.07%, and Japan's Nikkei Stock 225 down -1.63% [6] Earnings and Guidance - Helen of Troy Ltd has lowered its full-year adjusted EPS guidance to $3.25-$3.75, below the consensus of $4.03, resulting in a decline of more than -12% in its stock [15] - Constellation Brands reported Q3 comparable net sales of $2.22 billion, exceeding the consensus of $2.16 billion, leading to a stock increase of more than +6% [17]