US dollar index extends rally to fresh 13-year highs above 103.00

The greenback rose sharply for the second day in a row in the currency market, as it continues to receive support the day after the Federal Reserve rose rates as expected and surprised by signaling a potential scenario with three rate hikes during 2017. Greenback pulled back during the last hours of Thursday suggestion a possible exhaustion to the upside. 

The US Dollar Index peaked during the American session at 103.51, a fresh 13-year high. Afterward pulled back and it was about to end the day hovering around 103.00, up 2.09% since Fed’s decision. The US dollar climbed in the market despite the recovery in US bonds. Yields printed fresh highs for the year but then declined. 

Equity and data resilient

In Wall Street, the Dow Jones index approached record intraday levels and pulled back. It was still up for the day, around 19,865, up 0.37% while the Nasdaq was gaining 0.37%. Equity market in the US remained resilient despite the rate hike.

Economic data released on Thursday in the US included the November CPI, that rose as expected from an annual rate of 1.6% to 1.7%. The NAHB homebuilder sentiment climbed above expectation from 63 to 70. Manufacturing data surprise significantly to the upside: the Markit PMI reached 54.2, the Philly Fed rose to the highest since 2014 to 21.5, and the Empire Manufacturing index climbed to 9.0. “These are surprisingly robust headline readings given the stronger USD backdrop although there's arguably a "Trump-bump" in this data”, said analysts from Westpac. The economic calendar for tomorrow in the US shows as main events the building permits and the housing starts reports.