US Dollar Index Rises Ahead of NFP Data
The US Dollar Index (DXY) strengthened near 99.00 in Friday's Asian trading session. This strengthening occurred as market participants opted for caution ahead of the release of US Nonfarm Payrolls (NFP) data, which could potentially alter the direction of Fed interest rate expectations.
The DXY—which measures the dollar's strength against six major currencies—posted gains for the fourth consecutive session and traded around 98.90. This movement indicates continued strong demand for the dollar ahead of key employment data.
The market is awaiting the December NFP report, which is expected to show an increase of around 60,000 jobs, down from 64,000 in November. This data is considered crucial as it will provide a snapshot of the strength of the labor market and determine the direction of future Fed policy.
Based on previously released data, initial jobless claims rose to 208,000 in the week ending January 3. This figure was slightly higher than the previous week's revised 200,000, but still lower than the market forecast of 210,000. Continuing Claims also increased to 1.914 million from 1.858 million, indicating that the number of people receiving unemployment benefits is slowly increasing.
Other signs of a weakening labor market are also showing signs of weakening. ADP data showed a 41,000 increase in private sector jobs in December, lower than the 47,000 expected, after November was revised down. Meanwhile, JOLTS data reported 7.146 million job openings in November, below the 7.6 million forecast.
On the policy front, US Treasury Secretary Scott Bessent stated that the Fed should continue cutting interest rates. He considered lower rates the "missing ingredient" to boost stronger US economic growth and urged the Fed not to delay.
However, the market currently still expects the Fed to hold rates at its January 27-28 meeting, with a probability of around 86.2%. Therefore, the NFP results will be a key indicator of whether market expectations will shift—and whether the dollar's rally continues or reverses.
5 key points from the narrative:
1. The DXY strengthened near 99.00 and recorded four consecutive sessions of gains ahead of the NFP release.
2. December's NFP is expected to be +60,000, down from +64,000 in November.
3. Jobless claims rose to 208,000; continuing claims rose to 1.914 million, indicating a gradual increase in benefit recipients.
4. ADP (+41,000) and JOLTS (7.146 million) data indicate the labor market is starting to soften.
5. Scott Bessent is pushing the Fed to continue cutting rates, tet. (asd)
Source: Newsmaker.id
