The US Dollar extended its impressive rally this week, reaching fresh 2024 highs, even as some momentum from the Trump-led rally showed signs of easing. Despite a minor pullback in US Treasury yields, the Dollar’s strength remained firm in the lead-up to a packed economic calendar on Friday. Investors around the world have their eyes set on upcoming data points to gauge the health of the US economy and the trajectory of the Dollar.

Dollar Index Reaches New 2024 Highs

The US Dollar Index (DXY), a measure of the Dollar’s strength against a basket of major currencies, climbed to a new peak above 107.00. This came despite declining yields across the Treasury curve, indicating a continued demand for the Greenback in global markets. Friday’s US economic calendar is set to provide crucial insights, with retail sales data at the forefront. Analysts are also watching the NY Empire State Manufacturing Index, as well as data on export and import prices, industrial production, manufacturing production, and business inventories, all of which are expected to offer clues about the Dollar’s next moves.

EUR/USD and GBP/USD Reach New Lows

The Euro and British Pound both took a hit this week against the surging Dollar. EUR/USD dipped below the 1.0500 support level, marking a fresh low for 2024. The Euro’s downturn comes amid expectations surrounding Germany’s upcoming wholesale price data, alongside key speeches by European Central Bank officials, including McCaul, Lane, and Cipollone. Investors are on alert for any indication of ECB policy shifts that could counterbalance the Dollar’s momentum.

Meanwhile, GBP/USD also broke below the 1.2700 support, marking new lows as the Dollar continued its gains. The British economic calendar is packed with data releases, with advanced Q3 GDP growth rate figures taking center stage. Other key data points in the UK include business investment, goods trade balance, industrial and manufacturing production, construction output, the Q2 labor productivity index, and the NIESR Monthly GDP Tracker. This data is critical for gauging the resilience of the British economy in the face of the Greenback’s strength.

USD/JPY Climbs to New Heights

The USD/JPY exchange rate pushed past the 156.00 level, a height not seen since mid-July, fueled by sustained Dollar strength. Japan’s upcoming data, including its flash Q3 GDP growth rate, capacity utilization, industrial production, and the Tertiary Industry Index, will provide key insights into the Japanese economy. Market participants are watching for any signals that may indicate how Japan plans to address the fluctuating Dollar-Yen dynamics.

AUD/USD and Commodity Prices: Market Crosswinds

The Australian Dollar was also affected by the rising Dollar, as AUD/USD fell to new lows near 0.6450. The commodity complex’s inconclusive price action added pressure to the Aussie, while the Reserve Bank of Australia’s (RBA) Jones is the sole event on Australia’s end-of-week economic docket. Without additional major economic releases, the Aussie Dollar may face continued downward pressure, especially if the Greenback maintains its upward momentum.

Commodity Market Highlights: Oil and Precious Metals

In the commodities space, WTI crude oil prices rose slightly, following a positive weekly report from the Energy Information Administration (EIA). Prices edged closer to the critical $70 per barrel mark, with further gains likely contingent on Friday’s economic data and any potential developments in global oil demand.

Gold prices saw a slight recovery, bouncing back to the $2,570 range after dipping to new lows of around $2,535 earlier in the day. Silver also made a significant rebound, breaking past the sub-$30.00 level per ounce and ending the day with notable gains.

Outlook for the Dollar and Global Markets

With a busy economic calendar ahead, markets remain vigilant about potential shifts in economic trends or policy changes that could impact the Dollar’s trajectory. Friday’s retail sales data and manufacturing indicators in the US will be particularly telling for short-term expectations, while central bank signals from Europe and data from Japan and the UK will also weigh on the outlook. As global markets process this influx of information, the Dollar’s trajectory will remain closely tied to the unfolding economic landscape and the relative performance of major economies.