Anna 
The U.S. dollar (USD) index extended its winning streak on Wednesday, reaching above 104.00, marking its highest level in nearly three weeks. This surge comes ahead of a critical U.S. economic report set to unveil challenging layoff data for November and weekly jobless claims. Despite signs of a cooling labor market, a cautious market stance propelled the dollar’s strength for the third consecutive day.
On Wednesday, U.S. data provided further indications of a labor market slowdown. The ADP employment change for November came in at 103,000, falling below market expectations of 130,000. Additionally, unit labor costs for the third quarter dropped by 1.2%, surpassing analysts’ expectations for a 0.9% decline. However, despite these developments, U.S. stocks closed lower, and U.S. stock index futures faced challenges gaining momentum during Asian trading hours.
Earlier on Thursday, the General Administration of Customs of the People’s Republic of China reported a widening trade surplus to $68.39 billion in November, surpassing analysts’ expectations for a $58.1 billion surplus. However, imports fell by 0.6% year-on-year during the same period, leading to a lack of bullish momentum in Hong Kong’s Hang Seng Index, which closed down 1%.
The Bank of Canada (BOC) maintained its policy rate at 5% on Wednesday, as anticipated. The BOC’s policy statement noted the absence of excess demand in the economy. In the aftermath of the meeting, USD/CAD continued its ascent, trading just above 1.3600. Simultaneously, West Texas Intermediate oil prices experienced a nearly 4% decline, falling below $70 on Wednesday for the first time since late June, putting pressure on the commodity-sensitive Canadian dollar.
EUR/USD closed negatively for the sixth consecutive day on Wednesday, struggling to rebound early on Thursday and trading in a narrow channel just above 1.0750. Euro zone data revealed a 1.2% year-on-year drop in retail sales for October.
After settling below 1.2600 on Wednesday, GBP/USD continued its downward trajectory, hitting its weakest level since November 24, falling below 1.2550. At the time of reporting, the pair traded flat around 1.2560.
Bank of Japan Governor Kazuo Ueda discussed policy options on Thursday for when the central bank exits its ultra-easy policy. Ueda presented the possibility of maintaining the interest rate applied to reserves or resuming a policy targeting the overnight lending rate. USD/JPY faced significant bearish pressure in response to these comments, approaching 146.00 and reaching its lowest levels since early September.
Gold held firm on Wednesday, supported by a pullback in U.S. Treasury yields despite the broad strength of the dollar. Gold/USD remained relatively stable near $2,030 in early trade on Thursday. As markets continue to navigate economic data and central bank developments, the strength of the U.S. dollar remains a focal point for global investors.
