Dollar Holds Steady Ahead of Key U.S. Jobs Report as Markets Digest Mixed Data

The U.S. dollar remained largely steady on Thursday as investors weighed a mix of economic indicators while positioning for a crucial jobs report due Friday that could shape expectations around the Federal Reserve’s interest rate path.

Traders are cautious following data showing mixed signals in the U.S. economy — job openings declined more than expected in November, suggesting a cooling labour market, while other indicators such as services-sector activity unexpectedly strengthened in December. This blend of uneven results has left markets uncertain about how monetary policy might evolve.

Currency and Market Movement

• The U.S. Dollar Index (DXY), which tracks the greenback against a basket of major currencies, held around 98.7, remaining stable for the session and poised for a modest weekly gain after a weak performance in 2025. MarketScreener
• Against individual currencies, the euro hovered near $1.17, and the Sterling remained around $1.345, while the Japanese yen and other Asia-Pacific currencies showed little movement ahead of major data releases.

Fed Outlook and Rate Expectations

Financial markets are pricing in potential rate cuts later in 2026, although the Federal Reserve indicated in late 2025 that it may only deliver one additional cut this year. Investors widely expect rates to stay unchanged in January, pending clearer signals from incoming economic data.

Analysts say the mixed data complicates the Fed’s policy outlook, as signs of labour-market softening could support easing bets, while resilient segments of the economy — such as services — argue for a cautious stance on rate changes.

Geopolitical and Policy Factors

Currency markets are also keeping an eye on geopolitical developments, including ongoing tensions in global trade and a possible U.S. Supreme Court ruling on tariff policies, which could influence risk sentiment and dollar demand.

With the U.S. nonfarm payrolls report approaching, traders will closely watch Friday’s data for clearer cues on job growth, unemployment and wage trends — all key inputs for the Fed’s monetary policy decisions in 2026.