The US Dollar (USD) opened the week firmer against all major peers, with Dollar Index (DXY) approaching its 200-day moving average, while Brent crude slid toward the $58.40 multi-year low and gold pushed toward record highs. Markets remain calm across equities and bonds, but relative monetary policy continues to weigh on USD as attention turns to the December ISM manufacturing data for clues on inflation pressures and labor market softness, BBH FX analysts report.

Oil slides toward multi-year lows as Gold nears record

"USD kicked off the week firmer against all major currencies, with the dollar index (DXY) facing next resistance at its 200-day moving average. Brent crude oil prices dropped as much as 2.4% to $59.80 a barrel, closing in on its multi-year low of $58.40 recorded on April 9, 2025. Gold is up, eyeing its record high of nearly $4550 an ounce set on December 26, 2025. Stock markets are gaining ground while bond markets are steady."

"The Trump administration action in Venezuela is entirely consistent with the updated US National Security Strategy report published in November last year. As such, the implications for USD should be limited. Instead, relative monetary policy remains a drag for USD. Most other major central banks are done easing, while the Fed has room to deliver the 50bps of easing priced-in by Fed funds futures in 2026. US labor demand is weak and upside risks to inflation are fading."

"The December ISM manufacturing index is expected to show a slower contraction in manufacturing sector activity. The headline index is projected at 48.4 vs. 48.2 in November. Watch the prices paid and employment sub-indexes to see if inflation risks continue to recede and/or job losses deepen."