Dollar Nears Two-Month Low as Markets Await Delayed US Jobs Data

AsianForexHub Market Pulse

• The Dollar Index fell 0.2% to 98.261, approaching a two-month low.
• Market focus is on the delayed combined October/November US jobs report.
• Fed funds futures price a 75.6% probability of a rate hold at the Jan 28 meeting.
• The BOJ is expected to hike rates (25 bps to 0.75%), while the BOE may cut rates.
• Antipodean currencies gained momentum as their central banks shut the door on further rate cuts.

The U.S. dollar sagged to near a two-month low at the start of the Asian trading session on Tuesday as markets awaited the release of a slew of economic data, including the delayed November U.S. jobs report. The dollar index, which measures the currency’s strength against a basket of six key rivals, was down 0.2% at 98.261, approaching the lowest levels since October 17.

Position your trades ahead of the long-awaited US jobs report.

Focus on Delayed Jobs and Manufacturing Data

The Bureau of Labor Statistics will release its long-awaited combined employment reports for October and November later, following delays to data collection during the longest U.S. government shutdown in history. A raft of preliminary manufacturing indicators are also due for release.

HSBC’s global head of FX research, Paul Mackel, stated that the jobs data “will help give closure on how U.S. employment conditions were panning out during the federal government shutdown”. He added that “The Fed’s messaging last week gave us reassurance that the broad USD is not out of the woods yet”.

Fed funds futures are pricing an implied 75.6% probability of a hold in rates at the U.S. central bank’s next meeting on January 28, unchanged from a day earlier, according to the CME Group’s FedWatch tool.

Central Bank Decisions Loom Large

Markets will have to contend with a host of other policy catalysts during the week with several central bank decisions due:

• The Bank of Japan (BOJ) is expected to hike rates by 25 basis points to 0.75%, causing the dollar to ease 0.1% to 155.07 yen as traders braced for the decision.
• The Bank of England (BOE) may make an equal-sized cut to 3.75%.
• The European Central Bank (ECB), Sweden’s Riksbank, and Norway’s Norges Bank are all expected to keep interest rates on hold.

Antipodean Currencies Show Resilience

The euro was steady at $1.17535 as peace talks to end the war in Ukraine made progress, with the United States offering to provide NATO-style security guarantees for Kyiv. The British pound was flat at $1.3376.² Against the Chinese yuan trading offshore, the dollar was flat at 7.0371 yuan, its weakest levels since October 3, 2024.

The Australian dollar edged up 0.1% to $0.66445, and the kiwi dollar added 0.1% to $0.5788. Both the Australian and New Zealand central banks have shut the door on any further rate cuts, providing momentum to the Antipodean currencies.

Track the potential impact of five different central bank decisions (BOJ, BOE, ECB) this week.