Dollar Gains on Positive US Labor News and Higher Bond Yields

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liquidity demand for the dollar.Questions about the Fed's independence are limiting gains in the dollar after President Trump said Monday evening that he "still might" fire Fed Chair Powell.  Also, strength in the Chinese yuan is undercutting the dollar after the yuan rallied to a 2.5-year high today.Is There More to Tuesday's Rally in Metals Than a Simple "Turnaround"?Dollar Edges Higher on US Economic News and FOMC MinutesIs One Asset Screaming that Stocks are Cheap Going into 2026? Can the S&P 500 Reach 10,000 in 2026?Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines.US weekly initial unemployment claims unexpectedly fell -16,000 to a 1-month low of 199,000, showing a stronger labor market than expectations of an increase to 218,000.The markets are discounting the odds at 15% for a -25 bp rate cut at the FOMC's next meeting on January 27-28.The dollar continues to see underlying weakness as the FOMC is expected to cut interest rates by about -50 bp in 2026, while the BOJ is expected to raise rates by another +25 bp in 2026, and the ECB is expected to leave rates unchanged in 2026.The dollar is also under pressure as the Fed boosts liquidity in the financial system, having begun purchasing $40 billion a month in T-bills in mid-December.  The dollar is also being undercut by concerns that President Trump intends to appoint a dovish Fed Chair, which would be bearish for the dollar.  Mr. Trump recently said that he will announce his selection for the new Fed Chair in early 2026.  Bloomberg reported that National Economic Council Director Kevin Hassett is the most likely choice as the next Fed Chair, seen by markets as the most dovish candidate.EUR/USD (^EURUSD) slid to a 1-week low today and is down by -0.21%.  The dollar's strength today is pressuring the euro.  Also, the prospects that the Russian-Ukrainian war will drag on are bearish for the euro after there was no breakthrough in weekend talks to end the war. Trading activity in the euro is below normal, as markets in Germany are closed for the New Year's holiday.Swaps are pricing in a 1% chance of a +25 bp rate hike by the ECB at the next policy meeting on February 5.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,845.50 -50.74 (-0.74%)Dow 3048,063.29 -303.77 (-0.63%)Nasdaq23,241.99 -177.09 (-0.76%)Russell 20002,481.91 -18.68 (-0.75%)VIX14.95 0.00 (0.00%)Gold4,380.00 +38.90 (+0.90%)Trending tickersBTC-USD Bitcoin USD 88,761.70 +982.23 (+1.12%)BIDU Baidu, Inc. 130.66 -1.72 (-1.30%)ETH-USD Ethereum USD 3,010.07 +31.70 (+1.06%)XRP-USD XRP USD 1.88 +0.04 (+2.24%)TSLA Tesla, Inc. 449.72 -4.52 (-1.00%)PortfolioSign in to access your portfolioSign inTop gainersAXSM Axsome Therapeutics, Inc. 182.64 +33.85 (+22.75%)PSNY Polestar Automotive Holding UK PLC 21.37 +1.88 (+9.65%)ONDS Ondas Holdings Inc. 9.76 +0.77 (+8.57%)DJT Trump Media & Technology Group Corp. 13.24 +0.67 (+5.33%)PBF PBF Energy Inc. 27.12 +1.08 (+4.15%)Top losersCORT Corcept Therapeutics Incorporated 34.80 -35.40 (-50.42%)QXO QXO, Inc. 19.29 -1.75 (-8.32%)RGC Regencell Bioscience Holdings Limited 21.00 -1.90 (-8.30%)NIO NIO Inc. 5.10 -0.40 (-7.27%)PSLV Sprott Physical Silver Trust 23.65 -1.57 (-6.23%)Most activeONDS Ondas Holdings Inc. 9.76 +0.77 (+8.57%)NVDA NVIDIA Corporation 186.50 -1.04 (-0.55%)PLUG Plug Power Inc. 1.9700 +0.0350 (+1.81%)NIO NIO Inc. 5.10 -0.40 (-7.27%)TSLA Tesla, Inc. 449.72 -4.52 (-1.00%)Top economic eventsEarnings eventsMy earnings eventsEarnings events