Dollar Runs Out of Steam: Job Cuts & Claims Data Lead the Way
The US dollar index rebounded to nearly flat at around 97.6 on Thursday (February 5th), after initially strengthening. But its momentum quickly ran out of steam: a series of US employment data began to signal a cautious tone to the market.
The main trigger came from the surge in Challenger job cuts, coupled with a corresponding rise in initial jobless claims. Furthermore, the previous ADP data was also well below expectations—strengthening the "job market is cooling" narrative.
When employment slows, the market usually immediately recalculates the direction of the Fed's policy. As a result, speculation of interest rate cuts reignited—and this is what prevented the dollar from continuing its rally, despite a brief boost from risk-off in stocks and precious metals.
In Europe, investor focus was also divided on central bank decisions. The ECB and the Bank of England both maintained interest rates, but the tone of their comments differed: sterling tended to be under more pressure because the market perceived the BoE as more "soft."
Meanwhile, major currency pairs saw limited movement: the euro held steady around 1.18, and USD/JPY remained strong around 156 ahead of the Japanese elections this weekend. Commodity currencies like the AUD and NZD also weakened amid volatile global sentiment.
In conclusion: the dollar hasn't collapsed yet, but its momentum isn't yet strong enough to make a significant run — the market is now awaiting the next "nail," whether from further US data or a more decisive shift in interest rate expectations.
Source: Newsmaker.id
