US Dollar Index climbs close to 99.00 prior to Nonfarm Payrolls release

US Dollar Index Maintains Upward Momentum

The US Dollar Index (DXY), which tracks the performance of the US Dollar against a basket of six leading currencies, is on track for its fourth consecutive day of gains. During Friday’s Asian trading session, the DXY hovered near 98.90.

The US Dollar continues to strengthen as investors adopt a cautious stance ahead of the upcoming Nonfarm Payrolls (NFP) release. This key report is anticipated to shed more light on the state of the US labor market and influence the Federal Reserve’s future policy decisions. Economists predict that December’s NFP will show an increase of 60,000 jobs, slightly lower than November’s 64,000 gain.

On Thursday, the US Department of Labor revealed that initial jobless claims rose modestly to 208,000 for the week ending January 3. This figure was just under the expected 210,000 but higher than the revised 200,000 reported the previous week. Meanwhile, the number of people continuing to claim unemployment benefits climbed to 1.914 million from 1.858 million, signaling a gradual uptick in ongoing claims. More details can be found in the economic calendar.

Data released by Automatic Data Processing (ADP) on Wednesday indicated that private sector employment increased by 41,000 jobs in December, following a revised decrease of 29,000 in November. However, this result came in slightly below the market’s expectation of 47,000 new positions.

Job openings, as reported by the JOLTS survey, totaled 7.146 million in November. This was a decrease from October’s revised figure of 7.449 million (originally 7.67 million) and fell short of the anticipated 7.6 million openings.

In an interview with CNBC on Thursday, US Treasury Secretary Scott Bessent advocated for further interest rate cuts by the Federal Reserve. He argued that reducing rates is the key factor needed to boost economic growth and urged the Fed not to postpone such action.

The CME Group’s FedWatch tool currently indicates that futures markets assign an 86.2% chance that the Federal Reserve will leave interest rates unchanged at its upcoming meeting scheduled for January 27–28.