Dollar rallies as traders look past Venezuela to flurry of US data
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TOKYO, Jan 5 : The dollar started the first full trading week of 2026 with a broad rally, climbing to a 3-1/2-week peak versus the euro and hitting two-week highs against the yen, Swiss franc and Canadian dollar.
Currency traders largely looked past the United States' weekend raid in Venezuela and the capture of President Nicolas Maduro, focusing instead on a slate of U.S. macroeconomic indicators due this week that could be crucial in steering Federal Reserve policy.
The dollar advanced 0.3 per cent to $1.1682 per euro, after earlier touching its strongest level since December 10 at $1.1672.
It climbed as high as 157.295 yen, 0.7951 Swiss franc and C$1.37771, all of which were the highest levels since December 22.
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"I dare say the FX complex is not much of a reflection of risks stemming from Venezuela, but more about what the U.S. data is going to tell us about the Fed's policy path," said Kyle Rodda, senior financial markets analyst at Capital.com.
A recent run of resilient U.S. data has markets contemplating a potentially slower pace of interest rate cuts this year, he said.
The data rollout this week begins with ISM manufacturing figures on Monday and culminates with the monthly non-farm payrolls report on Friday.
Traders currently expect two U.S. rate cuts this year, according to LSEG calculations based on futures.
Investors are also awaiting U.S. President Donald Trump's choice for the next Fed chair, with Jerome Powell's term ending in May. Trump has said he will announce his pick this month, and has said Powell's successor will be "someone who believes in lower interest rates, by a lot."
Meanwhile, Bank of Japan Governor Kazuo Ueda said on Monday that the central bank will continue to raise rates if economic and price developments move in line with its forecasts. It is a view he has reiterated several times in recent months, including after December's as-expected decision to raise rates to a three-decade high.
The dollar advanced 0.1 per cent to $1.3425 per British pound, and added 0.3 per cent to $0.6670 versus the Aussie dollar.
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