The US dollar (USD) saw an increase in value against most of its major global trading partners on Thursday, except for the Japanese yen, which gained strength following a statement from the Bank of Japan.
The dollar index (DXY), which tracks the value of the US dollar compared to other major currencies, is currently about 2% lower than its recent peak. Analysts are now debating whether the dollar will drop another 1-2% in the near future.
Several factors have contributed to the dollar’s recent movements. One key reason is the latest US government tariff policies. Analysts believe that the Trump administration is using tariffs as a bargaining tool rather than for ideological reasons, and this approach may change in the second quarter of the year.
In other economic news, a report from the employment consulting firm Challenger, Gray & Christmas showed that planned job cuts in January increased compared to December. However, the number of layoffs was lower than in January of the previous year and the smallest recorded for a January report since 2022. The technology and retail industries experienced the highest number of job cut announcements, and business closures were the most common reason cited for these layoffs.
The exchange rates for some major currency pairs on Thursday were as follows:
- US dollar to Euro (USDEUR): The dollar strengthened against the euro, with the exchange rate dropping from 1.0406 on Wednesday to 1.0361 on Thursday. This drop followed reports that retail sales in the Eurozone declined more than expected in December. Meanwhile, the construction industry in the Eurozone showed slight improvement in January but remains weak.
- US dollar to British pound (GBPUSD): The British pound fell to 1.2376 from 1.2502 on Wednesday. The Bank of England lowered its interest rate by 0.25%, stating that it would continue to cut rates gradually and carefully. Two members of the central bank argued for a larger 0.50% rate cut instead. The Bank of England’s next meeting is set for March 20.
- US dollar to Japanese yen (USDJPY): The dollar fell slightly against the yen, moving from 152.7050 on Wednesday to 152.3948 on Thursday. The Bank of Japan did not release any new economic data, but a central bank official stated that Japan’s interest rates should rise to at least 1% by the second half of 2025. The current rate is 0.5%.
- US dollar to Canadian dollar (USDCAD): The US dollar strengthened against the Canadian dollar, moving from 1.4313 on Wednesday to 1.4353 on Thursday. Economic reports on Canada’s business conditions and consumer spending trends are expected later in the day, along with a speech by the Bank of Canada’s governor.
The next major central bank meetings are scheduled as follows:
- European Central Bank: March 5-6
- Bank of England: March 20
- Bank of Japan: March 18-19
- Bank of Canada: March 12
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