The dollar commenced the first complete trading week of the New Year with strength, climbing to a 3-1/2-week high against the euro and reaching a two-week peak versus the yen. Currency traders predominantly overlooked the recent U.S. operation in Venezuela and the apprehension of President Nicolas Maduro, directing their attention instead to a series of upcoming U.S. macroeconomic indicators that may significantly influence Federal Reserve policy.

The dollar increased by 0.1% to $1.1704 per euro, having earlier reached a peak of $1.170025, marking its strongest position since December 11. It increased by 0.2% to 157.08 yen after hitting 157.255 for the first time since December 22. “I would argue that the FX complex does not significantly reflect the risks associated with Venezuela; rather, it is more indicative of the insights we can glean from U.S. data regarding the Federal Reserve’s policy trajectory,” stated Kyle Rodda.

Recent robust U.S. data has led markets to consider a possibly more gradual approach to interest rate reductions this year, he stated. This week’s data rollout starts with ISM manufacturing figures on Monday and concludes with the monthly non-farm payrolls report on Friday. Market participants are anticipating two interest rate reductions in the U.S. this year, as indicated by data.

Investors are closely monitoring U.S. President Donald Trump’s decision regarding the next Fed chair, as Jerome Powell’s term is set to conclude in May. Trump has indicated that he will reveal his selection this month, stating that Powell’s successor will be “someone who believes in lower interest rates, by a lot.” The dollar increased by 0.1% to $1.3443 against the British pound, and also rose by 0.1% to C$1.3745. The Australian dollar decreased by 0.2%, reaching a value of $0.6682.