NEW YORK: The dollar edged higher against peer currencies including the Japanese yen on Thursday, as investors awaited Friday’s crucial nonfarm payrolls report, which could help assess the US labor market and the probable path of interest rates.
Data on Thursday showed that the number of Americans filing new applications for unemployment benefits increased moderately last week amid relatively low layoffs. US job openings fell more than expected in November while hiring eased, according to a Labor Department report on Wednesday.
“The market is looking for a bit more definitive evidence as to which way the economy is going,” said Marvin Loh, senior global market strategist at State Street in Boston.”The consensus is that the dollar will continue to weaken from here given that there’s still rate cuts expected from the Fed.”
The dollar was up 0.12 percent against against the Japanese yen at 156.925.
The dollar index, which measures the US currency against six rivals, was up 0.08 percent at 98.802 after hitting its highest since December 10.
Traders are pricing in at least two rate cuts from the Federal Reserve this year, although a divided central bank indicated in December there would be only one cut in 2026. The Fed is expected to keep rates steady at its meeting this month. Jerome Powell’s term as Fed chair ends in May.
“I think to a certain degree, we are going to be range bound for a little while until we get a little more clarity on whether or not the Fed is going to not only resume their cutting cycle but also cut more aggressively with the new leadership changes expected at the Fed a little later this year,” Loh added. President Donald Trump’s administration could be forced to refund more than USD133.5 billion in tariffs to importers if the US Supreme Court this week declares his duties unlawful could resurface to hurt the dollar. Trump said on Wednesday the 2027 US military budget should be USD1.5 trillion, stoking some concerns about rising debt and a higher risk premium on US assets.
On the euro front, recent inflation figures drove the currency lower and German Bund yields to a one-month low.
The euro was down 0.09 percent at USD1.1665 on Thursday, after dropping by 0.45 percent in the last two sessions.
“Soft European inflation reinforces dovish sentiment, while the Greenland crisis underscores Europe’s relative vulnerability, potentially triggering further euro selling,” said Olivier Korber, foreign exchange strategist at Societe Generale. US Secretary of State Marco Rubio told reporters Trump retained the option to address his objective to take over Greenland by military means, while alarmed allies, including France and Germany, were working on a response.
Analysts flagged that the debate about changes in European Central Bank policy shifted towards the possibility of a rate hike a year from now, while inflation is currently getting back to target with core edging lower.
The dollar was up 0.06 percent to 0.798 against the Swiss franc.
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