The US Dollar Index advanced for a fourth consecutive day, buoyed by optimistic economic signals from last week's initial jobless claims and Philadelphia Fed data, despite a widening trade deficit in December. The Japanese yen weakened against the dollar.
The Dollar Index rose 0.2%, on track for its longest winning streak since January 9th.
"Today's US economic data was somewhat mixed," commented Valentin Marinov, Head of G10 FX Research and Strategy at Crédit Agricole. "Nevertheless, the dollar may continue to find support as the US rates market persists in scaling back Federal Reserve expectations that I believe remain overly dovish."
Amid ongoing tensions in the Middle East, US-Iran negotiations also attracted significant attention. A statement indicated that failure to reach an agreement between the US and Iran could lead to severe consequences.
According to a report from Interfax, Kremlin spokesperson Peskov stated that Russia and Iran plan to conduct joint naval exercises, a decision reportedly made prior to the recent escalation of tensions in the Middle East.
The British pound declined 0.3% against the US dollar to 1.3452. The US dollar strengthened 0.2% against the Japanese yen to 155.07. The Australian dollar was largely unchanged at 0.7045 versus the US dollar; data from Bloomberg-compiled swap contracts linked to central bank meeting dates showed that better-than-expected unemployment figures prompted traders to increase the probability of a Reserve Bank of Australia rate hike in May from approximately 80% before the data release to 91%.
The euro fell 0.2% against the US dollar to 1.1762. Speculation about an early departure for Christine Lagarde sparked debate, raising questions about the European Central Bank's independence. The US dollar gained 0.1% against the Canadian dollar, reaching 1.3706.
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