Currency Buzz: Dollar Index Near Two Week High, US Leading Economic Index Stays On Rising Trajectory

24 Jan 2022 , 12:12 PM

The US dollar index has been well supported over last week amid heavy risk aversion in world markets which has provided good buying impetus for the currency in safe haven demand. The index has approached near 96 mark today, hitting almost its two week high as sustained selling in equities was further aided by firm economic outlook for the US. The Conference Board Leading Economic Index (LEI) for the US increased by 0.8% in December to 120.8 (2016 = 100), following a 0.7% increase in November and a 0.7% increase in October. The US LEI ended 2021 on a rising trajectory, suggesting the economy will continue to expand well into the spring, the Conference Board noted. For the first quarter, headwinds from the Omicron variant, labor shortages, and inflationary pressures as well as the Federal Reserves expected interest rate hikes may moderate economic growth. The Conference Board forecasts GDP growth for Q1 2022 to slow to a relatively healthy 2.2% (annualized). However, for all of 2022, it forecast that the US economy will expand by 3.5% well above the pre-pandemic trend growth.

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