The dollar index is up by +0.17% today, hitting a 4-week high. US job cuts fell to a 17-month low, weekly jobless claims rose less than expected, Q3 non-farm productivity increased, and the trade deficit shrank to a 16-year low, all positive for the labor market and Fed policy.

US Dec Challenger job cuts dropped -8.3% y/y to 35,553, a 17-month low, supporting the US labor market. Weekly initial unemployment claims rose by +8,000 to 208,000, showing a stronger labor market than anticipated.

US Q3 non-farm productivity rose +4.9%, close to expectations, and unit labor costs fell -1.9%. The US Oct trade deficit surprisingly shrank to -$29.4 billion, the smallest in 16 years, beating expectations.

The markets predict a 12% chance of a -25 bp rate cut at the FOMC’s next meeting. The dollar faces underlying weakness, with expectations of a -50 bp rate cut in 2026. Possibility of a dovish Fed Chair appointment by Trump is bearish for the dollar.

EUR/USD fell to a 4-week low, down by -0.03%, influenced by the stronger dollar. Eurozone Dec economic confidence declined unexpectedly, impacting the euro. Eurozone Nov PPI recorded the sharpest decline in 13 months, dovish for ECB policy.

The Eurozone Nov unemployment rate unexpectedly fell to 6.3%, beating expectations. German Nov factory orders surged +5.6% m/m, the largest increase in 11 months, supporting ECB policy. ECB Vice President de Guindos stated that ECB interest rates are at an appropriate level.

USD/JPY rose by +0.13% today, pressured by a stronger dollar. Weaker Japanese economic news, including a drop in Dec consumer confidence and lower-than-expected Nov real cash earnings, is bearish for the yen.

Japanese fiscal concerns continue to impact the yen, with plans for record defense spending next fiscal year. The markets are not anticipating a BOJ rate hike at the next meeting.

COMEX gold and silver prices dropped today, following the dollar index’s rally and concerns over commodity index rebalancing. Precious metals receive support from safe-haven demand amid geopolitical risks and fears of easier Fed policy.

Central bank demand for gold remains strong, with China’s PBOC increasing reserves. Fund demand for precious metals is high, with long holdings in gold and silver ETFs at multi-year highs.

Read more at Yahoo Finance: Dollar Climbs on Better-Than-Expected US Economic News