Dollar Strengthens, Job Market Still Strong?
The dollar index strengthened to 98.5 on Thursday, its highest level since December 9, as investors weighed a mixed batch of US economic data and began to recalibrate expectations for Federal Reserve policy direction.
On the labor front, initial jobless claims edged up to 208,000, but layoffs actually fell to 35,553 in December—the lowest since July 2024. This combination signals a relatively resilient labor market and eases concerns about a rapid slowdown.
On the external front, the trade deficit narrowed sharply to $29.4 billion in October—the smallest since June 2009 and well below expectations. This narrowing occurred as imports fell to a 21-month low, while exports hit a record, amid volatility fueled by tariffs.
Market focus now shifts to the December jobs report, released Friday, as a key indicator of the next direction. For now, the market is pricing in a strong chance that the Fed will hold interest rates, but expectations of a cut in the second half of the year remain alive—meaning the dollar's subsequent reaction will depend heavily on the tone of the labor data.
Source: Newsmaker.id
