The U.S. dollar index (DXY) fell by 0.24% today following the unexpected contraction of the December Empire manufacturing survey, which dropped 22.6 points to -3.9, significantly below the anticipated 10.0. This decline reflects growing concerns over a restrictive Federal Reserve policy, especially after Fed Governor Stephen Miran remarked on the need for a less tight monetary stance. Additionally, the Fed’s recent decision to inject liquidity into the financial system by purchasing $40 billion monthly in T-bills has weighed on dollar strength.
The euro gained 0.23%, reaching a 2.5-month high, bolstered by a 0.8% month-on-month increase in Eurozone industrial production—the largest rise in five months. This upward trajectory is supported by expectations that the European Central Bank (ECB) has concluded its rate cuts, contrasting with the Fed’s anticipated easing in 2026.
In Japan, the yen strengthened by 0.60%, reaching a one-week high against the dollar, fueled by a more favorable outlook from the Q4 Tankan large manufacturing survey, which rose to 15, exceeding forecasts. Expectations of a 25 basis point rate hike by the Bank of Japan at Friday’s meeting further supported the yen amid lower T-note yields.
