The surge in the dollar observed this week is currently undergoing consolidation. While interest rates have stabilized, the ongoing adjustment, particularly in pushing the first rate from March towards June, does not appear to be complete. This indicates that the dollar's recovery from the sell-off in November-December of the previous year may also be incomplete. Presently, the dollar is showing slight firmness against all G10 currencies except the Swiss franc.

Chinese and Hong Kong stocks traded higher, contributing to the upward movement in South Korea and Taiwan shares. However, most other major markets in the region experienced heavy trading. Europe's Stoxx 600 is rebounding from a three-day, 2% drop, although it is only showing marginal stabilization so far today. US index futures are also slightly firmer, lacking strong conviction.

Meanwhile, February WTI is rebounding from yesterday's dip to $70.50 and is currently trading above $73.

Asia Pacific
The Australian labor market is exhibiting signs of slowing, with December figures being particularly dismal. It lost 65.1k jobs last month, contrary to expectations of a 15k increase. Full-time positions saw a sharp decline of 106.6k, the most significant drop since May 2020, wiping out gains from the second half of the previous year.
The upcoming highlight is the flash January PMI.

In Japan, industrial output confirmed a 0.9% decline in November, resulting in a 1.4% year-over-year decrease. Despite a negative interest rate target and a currency undervalued by more than 50% according to the OECD's purchasing power parity model, the Japanese economy continues to face challenges.

The greenback is trading within yesterday's range, consolidating between JPY147.65 and JPY148.25.
The Aussie retested the $0.6525 low today and reached new session highs around $0.6570 in the European morning.

Europe 
The eurozone's November current account received little attention from the markets. Despite ECB President Lagarde's efforts to discourage speculation about an early rate cut, the swaps market is indicating an 80% chance of a cut in April. However, this is a decrease from late November levels.

The euro briefly exceeded $1.0905 in the Asia Pacific session and appears poised to extend gains in North America.
Sterling rebounded sharply from the lower end of its $1.26-$1.28 trading range, nearly reaching the range's midpoint and briefly surpassing $1.27 before retracing to around $1.2675 in Europe.

America
The initial estimate of Q4 2023 GDP is scheduled for next week. The likelihood of a March rate cut has decreased to about 55%, down from over 80% at the end of the previous week and 100% at the end of the previous year.
Today's highlight may be the Philadelphia Fed survey. The recent sharp decline in the Empire State manufacturing survey (-43.7 from -14.5) has garnered attention, suggesting a challenging start to the New Year.

The US dollar tested support near CAD1.3480 around the 200-day moving average today and held firm.