SINGAPORE: The dollar was little changed on Thursday as investors assessed mixed signals from recent US economic data ahead of a closely watched jobs report due on Friday.
The euro was steady at $1.1679 and on track for a modest weekly decline, ahead of sentiment data from the region. The single currency gained about 13.5% in 2025, benefiting from the dollar’s weakness, with some analysts forecasting a move above $1.20 in 2026.
Sterling slipped 0.3% to $1.3456 but remained near a four-month high hit earlier in the week.
Data released on Thursday showed the US labour market remains in a “no hire, no fire” phase, with job openings falling more than expected in November and hiring slowing. However, activity in the services sector unexpectedly picked up in December, suggesting the economy ended 2025 on relatively firm footing.
“The latest US data releases paint a mixed picture of the economy,” said Lloyd Chan, senior currency analyst at MUFG. “For the Fed, this mix of signals could reinforce a cautious approach.”
Markets are pricing in at least two Federal Reserve rate cuts this year, though policymakers indicated in December they expect only one cut in 2026. The Fed is widely expected to leave rates unchanged at its January meeting.
The yen was flat at 156.69 per dollar, with traders reluctant to take large positions ahead of key data. The Australian dollar eased to $0.6704, just below a 15-month high, while the New Zealand dollar slipped 0.13% to $0.5763.
The dollar index was steady at 98.737 and set for a small weekly gain, despite the greenback coming off its weakest annual performance since 2017. Analysts expect further dollar declines this year, though at a slower pace.
“We might not see as many Fed rate cuts as expected in 2026, mainly because robust growth does not justify aggressive easing,” said Matthias Scheiber, senior portfolio manager at Allspring Global Investments.
Currency markets have remained largely calm despite geopolitical tensions, including US intervention in Venezuela and rising frictions between China and Japan.
Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities, said a potential Supreme Court ruling on President Donald Trump’s tariff policies could drive volatility.
“If there is a decision that the tariffs are constitutional, this would be dollar-positive,” he said.
— Reuters
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