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Following media reports that President-elect Trump is considering declaring a national economic emergency to justify the imposition of across-the-board tariffs, the dollar index rose in the overnight market, rising quickly in the morning and then consolidating in weakness before rising significantly in late trading.

The dollar index, which measures the greenback against six major currencies, ended the day up 0.5 percent at 109.090.

CNN quoted multiple anonymous sources as saying on the morning of the 8th that US President-elect Donald Trump is considering invoking the International Economic Emergency Powers Act (IEEPA) to declare the United States a "national economic emergency" to provide a basis for announcing new indiscriminate tariff policies.

Spurred by the news, the dollar index quickly moved higher in the morning, rising as high as 109.38.

Marc Chandler, chief market strategist at Bannockburn Global Forex, said the CNN report fit the theme of a stronger US dollar. The dollar strengthened on the day even after disappointing US private sector jobs data.

According to Chandler, that means people shouldn't resist a stronger dollar, a real move that isn't over yet.

Fed Governor Christopher Waller said earlier this morning that while data for the end of 2024 do show inflation looking stagnant at 2 per cent, market inflation forecasts and monthly and short-term inflation data give him confidence that US inflation will continue to fall, even if the pace of the process is more uncertain.

Waller believes inflation will continue to fall back toward its 2 percent target over the medium term and that it will be appropriate for the Fed to continue cutting interest rates. The pace of rate cuts will depend on the progress of falling inflation and the need not to let the labor market weaken.

Goldman Sachs analysts said how the Fed balances the potential impact of inflation with the negative impact on the economy will be critical to the dollar's direction. However, the Fed currently believes that the negative economic impact of tariffs in other parts of the world is greater than in the United States, and this will be reflected in monetary policy.

The minutes of the Federal Reserve's Dec. 17-18, 2024, monetary policy meeting, released on Thursday afternoon, showed that all participants agreed that uncertainty about the size, timing and economic impact of possible changes in foreign trade and immigration policy was high. These uncertainties are already reflected in the forecast data of some participants.

By late afternoon in New York, the euro was trading at $1.0309, down from $1.0355 the previous day. One pound was trading at $1.2357, down from $1.2490 in the previous session.

The dollar traded at Y158.46, up from Y157.78 in the previous session; The dollar traded at 0.9117 Swiss francs, up from 0.9086 in the previous session; The U.S. dollar traded at C $1.4389, up from C $1.4347 in the previous session. The dollar traded at 11.1612 kronor, up from 11.1091 in the previous session.