Market positioning will prevent significant dollar drop, Natixis saysFocus on Friday’s jobs report to gauge Fed’s 2026 rate pathSupreme Court decision on Trump’s tariffs could hurt the greenbackJapan-China tensions in the spotlight<\/p>\n
Jan 8 (Reuters) – The dollar was on track to advance on Thursday for a third straight day, though mixed U.S. economic data left markets cautious ahead of Friday\u2019s nonfarm payrolls report.<\/p>\n
Data on Thursday showed the U.S. labour market<\/a> appeared stuck in a “no hire, no fire” state, with job openings falling more than expected in November while hiring eased.<\/p>\n Sign up here.<\/a><\/p>\n However, services sector activity unexpectedly picked up in December, suggesting the economy ended 2025 on a solid footing.<\/p>\n The dollar index , which measures the U.S. currency against six rivals, was up 0.08% at 98.807 and set for its third straight rise. The dollar is coming off its worst annual performance since 2017, with analysts predicting another year of decline.<\/p>\n “The U.S. economy still looks pretty good. A lot of the positioning in short U.S. dollar has already been done, and I think that’s going to prevent the dollar from getting significantly weaker going forward,” said Jack Janasiewicz, lead portfolio strategist at Natixis.<\/p>\n “I think the winners could be some emerging market currencies more than the euro or the yen,\u201d he added.<\/p>\n 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 maintain rates at its meeting this month.<\/p>\n Markets have largely shrugged off geopolitical concerns after the U.S. intervention in Venezuela, focusing on economic data instead.<\/p>\n However, risks that President Donald Trump’s administration could be forced to to importers if the U.S. Supreme Court this week declares his duties unlawful could resurface to hurt the greenback.<\/p>\n “Across the Atlantic, U.S. labour market data also did little to shift the (interest rate) policy debate,” said Stefan Koopman, senior macro strategist at Rabobank.<\/p>\n WEAK DATA WEIGHS ON EURO<\/p>\n On the euro front, recent inflation figures drove the single currency lower and German Bund yields to a one-month low.<\/p>\n The single currency was down 0.05% at $1.1670 on Thursday, after dropping by 0.45% in the last two sessions.<\/p>\n \u201cThe market\u2019s debate has tentatively shifted towards the possibility of a (European Central Bank rate) hike a year from now,\u201d Rabobank’s Koopman added.<\/p>\n \u201cWith headline inflation back at target and core edging lower, it remains difficult to justify pricing an imminent tightening cycle.\u201d<\/p>\n The Japanese yen rose 0.05% at 156.70 per U.S. dollar as traders remained reluctant to place major bets before the release of economic reports.<\/p>\n “For those hoping for a significant appreciation of the yen, the only option for now is to wait for the conflict with China to cool down again,” said Michael Pfister, forex strategist at Commerzbank.<\/p>\n \u201cThe Chinese government could further escalate the conflict with a complete export ban on rare earths, which would deal a significant blow to the yen,\u201d he added.<\/p>\n Shares in Japanese chemical manufacturers fell<\/a> on Thursday while those of their Chinese rivals jumped after China said it was launching an anti-dumping probe into imports of chemicals used in chipmaking.<\/p>\n The Australian dollar eased to $0.6704, just below the 15-month high it touched earlier this week, while the New Zealand dollar fell 0.13% to $0.5763 .<\/p>\n Reporting by Stefano Rebaudo and Ankur Banerjee; editing by Shri Navaratnam, Edwina Gibbs and Kate Mayberry<\/p>\n Our Standards: The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n