Dollar Index Inches Higher Ahead of Jobs Report

USD

The dollar index, which measures the greenback against a basket of major currencies, inched higher to 90.02 after trading at its lowest levels since April 2018. The spike in US Treasury yields supported the greenback, where the US 10-year yields jumped to 1.102%, the highest since the 20th of March 2020. Market participants are looking forward to the US jobs figures to grab the latest insight into the labor market activity and how the Federal Reserve could alter the monetary policy based on numbers. The EURUSD declined to $1.2235, and the USDJPY rallied to 103.99. 

Equities

Major US stock index futures extended gains, posting fresh record high on anticipation of further stimulus. Investors are pricing in the prospects of Democrats winning the House of Senates and approving a $2000 direct payment, which would add at least $400 billion to the economic cycle. The Dow Jones Industrial Average futures rallied to 31147, the S&P500 futures rose to 3816, and Nasdaq futures advanced to 12983.

Metals

Precious metals prices declined further as the dollar edged higher along with US Treasury yields. The real interest rates are pushing higher as US yields recovered, adding pressure on gold as an inflationary hedge. The price of a gold ounce dipped to $1906, the price of a silver ounce tumbled to $26.92, and palladium futures held steady near $2430.

Oil

Oil prices held previous gains, supported by the current risk-on sentiment. Market participants are happy with the outcome of the OPEC+ meeting and optimistic about the economic recovery, with most PMIs showing a bit of improvement in activity in December relative to November. The West Texas Intermediate crude February delivery rose to $51.31, and Brent Blend March delivery edged higher to $54.88.

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