The U.S. dollar hovered near its lowest level in about two and a half months after recently released labour market data showed the U.S. jobs market was softer than expected, leaving investors unsure about the Federal Reserve’s next interest rate move. The data raised questions about the timing of future rate cuts, which has contributed to a subdued tone for the dollar.
The dollar index, which tracks the currency against a basket of major peers, remained around 98.19, close to the weakest mark since early October. This ongoing weakness has the index down sharply for the year, approaching its largest annual decline since 2017.
While the U.S. economy added more jobs than economists had expected, the unemployment rate rose to 4.6%, and analysts noted distortions in the data due to a prolonged government shutdown. Markets continued to await upcoming inflation figures that are expected to provide clearer guidance on monetary policy direction.
In currency markets, the euro held near a 12-week high against the dollar as traders anticipated the European Central Bank’s next policy decision, expected to keep rates steady. With uncertainties around the Fed’s rate path, investors are closely watching global central bank actions for cues on the future trajectory of major currencies.
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