20.02.202601:37:05UTC+00Dollar Heads for Strong Weekly Gain

The dollar index climbed toward 98 on Friday and was on track for a weekly gain of roughly 1%, buoyed by solid US economic data and hawkish signals from the Federal Reserve. On Thursday, weekly jobless claims fell to a five-week low, while the Philadelphia Fed business outlook index unexpectedly jumped to a five-month high. Offsetting those positives, the US trade deficit widened in December and pending home sales declined in January.

Attention now turns to the advance estimate of fourth-quarter GDP and the PCE price index, the Fed’s preferred measure of inflation. Minutes from the latest FOMC meeting showed policymakers split on the outlook for interest rates, with some indicating that additional increases could still be warranted if inflation remains elevated. Fed Governor Stephen Miran said he now expects a “less accommodative” rate path, pointing to resilient labor market conditions and persistent goods inflation. In response, traders have scaled back expectations for aggressive easing, but markets still price in two 25-basis-point rate cuts by year-end.