Dollar starts 2025 on a high

Source: Reuters.

Markets are facing a slower pace of Fed rate cuts, high US bond yields, the incoming Trump administration with its likely inflationary policies, and ongoing global geopolitical turmoil.

The DXY index currently sits at 108.35, with the dollar trading at 1.0367 against the euro and at 1.2534 against the pound.

The yen is near a five-month low at 157.10, and with Japanese markets closed until next week, we can still see further weakness. Look out for today's US jobless claims and manufacturing PMI data for clues on the state of the US economy and labour market.

China's Caixin PMI data disappointed this morning, coming in at 50.5 compared to market estimates of 51.6, reflecting the continued weakness in the economy.

The rand is trading firmer at R18.82 this morning after having weakened to above the R18.90 level yesterday. The short-term outlook for the local currency remains negative as international factors and the strength of the dollar weigh in.

Precious metals and oil prices open higher

Gold is trading 0.45% higher at $2,635, with the metal gaining support from a World Gold Council report that major central banks are expected to increase gold purchases this year.

Platinum and palladium are trading around 1.0% higher at $915 and $920, respectively. Brent crude climbed to above $75.00 on the back of the lower US stockpiles earlier but has fallen back to $74.85 after the weaker Chinese manufacturing data.