The U.S. dollar fell on Thursday as traders digest a slew of mixed economic data to gauge the outlook for the Federal Reserve’s interest rate cuts this year.
U.S. retail sales rose 0.4% last month after upward revisions the previous month, data from the Commerce Department’s Census Bureau showed.
Meanwhile, the number of Americans filing new applications for unemployment benefits increased more than expected last week, but remained at levels showing a healthy labor market.
The Philadelphia Fed Business Index, which jumped to 44.3 in January, was the lone surprise as the forecast was for a reading of minus 5.
The U.S. dollar index – a measure of the value of the greenback relative to a basket of foreign currencies – pared earlier gains and was last down 0.09% at 108.92.
“I think retail sales didn’t really have a significant impact,” said Vassili Serebriakov, FX strategist, at UBS Investment Bank.
“CPI had an impact initially in terms of weakening the dollar, but that was quickly reversed. And I think that just indicates that the market is still strongly biased to buy the dollar on dips, probably in anticipation of the inauguration next week, and the potentially dollar-supportive policies of the incoming Trump administration, including the possibility that tariffs will be raised relatively quickly.”
Donald Trump returns to the White House next week, and analysts expect some of his policies to boost growth as well as increase price pressure.
The focus of the day will be the nomination hearing of Trump’s choice of Scott Bessent to head the Treasury Department.
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Mastering the Basics
Geopolitical events, such as elections, trade negotiations, and conflicts, can impact market sentiment and currency stability. Being aware of these events can help you anticipate market movements.
Risk-Free Demo Trading
pay attention to the monetary policies of central banks, including interest rate decisions and quantitative easing measures. Changes in interest rates can lead to significant currency fluctuations, making it essential to understand the implications of central bank announcements.
Global Currency Pairs
Stay informed about key economic indicators such as GDP growth, unemployment rates, inflation, and consumer confidence. These indicators provide insights into the economic health of a country and can significantly influence currency values.
Every Trader Should Understand
Pay attention to the monetary policies of central banks, including interest rate decisions and quantitative easing measures. Changes in interest rates can lead to significant currency fluctuations, making it essential to understand the implications of central bank announcements.
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Risk Management:
Diversify your trades across different currency pairs or financial instruments to spread risk.
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Leverage and Margin:
Leverage and margin are fundamental concepts in forex trading that allow traders to control larger positions with a smaller amount of capital. Understanding these concepts is crucial for effective trading and risk management.
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Market Analysis:
Avoid impulsive trading decisions based on emotions or short-term market fluctuations
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