Dollar rallies as Trump refuses to rule out force to take Greenland and Panama Canal
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Daily Currency Update
After a dip on Monday, the dollar has regained momentum over the past 24 hours, boosted by better-than-expected domestic data. The ISM Services PMI for December, released yesterday afternoon, showed a reading of 54.1, surpassing the forecast of 53.5. Additionally, November’s Job Openings and Labor Turnover Survey (JOLTS) came in at 8.1 million, exceeding expectations of 7.73 million. While the JOLTS survey has been on a downward trend for three years, this marks its third consecutive increase and its highest level since July, bolstering arguments for the Federal Reserve to further slow its pace of interest rate cuts.As a result, EUR/USD has dropped by approximately a cent over the past 24 hours, now trading at 1.0330. Similarly, GBP/USD has mirrored this movement, declining to 1.2450.
Key Movers
The noise surrounding President-elect Trump's incoming administration continues to grow louder as we approach his inauguration on January 20th. Earlier this week, rumors of watered-down trade tariffs were aggressively rebuffed by Trump. Yesterday, he made headlines by targeting Panama and Greenland, suggesting he has not ruled out the use of force to bring the Panama Canal and Denmark-administered Greenland under U.S. control. Additionally, he proposed renaming the Gulf of Mexico to the Gulf of America.While this rhetoric is likely political posturing aimed at pressuring these regions to increase defense spending, it is unsettling U.S. allies globally and underscores the unpredictability expected during his second term. This erratic messaging is likely to keep markets on edge, which could work to the benefit of the U.S. dollar.
On the data front, the U.S. will release private sector employment figures and weekly unemployment claims at lunchtime. Later in the day, the minutes from the last Federal Open Market Committee policy meeting will be published. Meanwhile, it’s another quiet day for economic data from the UK and Europe.
Expected Ranges
- GBP/USD: 1.2390 - 1.2545 ▼
- GBP/EUR: 1.2010 - 1.2090 ▲
- GBP/AUD: 1.9935 - 2.0090 ▲
- EUR/USD: 1.0270 - 1.0410 ▼