Dollar Mixed Ahead of U.S Jobs, CPI Data
The US dollar traded on a mixed note against trading partners, the euro, the British pound, and the Japanese yen ahead of jobs data amidst weeks of speculation over a Fed rate cut in December.
The Euro to Dollar (EURUSD) exchange rate has consolidated around 1.16 on Tuesday after finding support below 1.15 in early November.
The dollar gained 0.46% to 155.26 yen on Tuesday. The dollar reached nearly JPY155.5 in early European trading today. The Japanese economy contracted at an annualised rate of 1.8% in Q3, which was slightly less than expected.
The economic weakness may help explain the Bank of Japan’s reluctance to raise rates. The Japanese yen approached its lowest level in ten months ahead of Prime Minister Sanae Takaichi and BOJ Governor Kazuo Ueda meeting.
Traders will be watching the talks closely for hints on the BOJ’s next steps and how policymakers may manage pressure on the yen, amid speculation that Takaichi will advocate a cautious approach to rate hikes.
The Hong Kong Dollar touched 7.78 against the USD, the lowest since October 2025. Over the past 4 weeks, US Dollar Hong Kong Dollar gained 0.12%, and in the last 12 months, it decreased 0.07%.
The market anticipates the release of September jobs report, which the Bureau of Labor Statistics (BLS) confirmed will be published on Thursday.
Unemployment condition will signal what the US Federal Reserve will do to policy rate in December. After 50 basis points cuts, Fed had indicates plan to slow down monetary easing in December amidst tight inflation and unemployment.
ADP provides its weekly update tomorrow, ahead of the BLS September jobs report on Thursday. ADP’s monthly report has been fairly accurate this year.
In the three months through August, the BLS estimated that US private sector employment rose by an average of 29k a month, while ADP’s projected an average of 26k a month.
For the eight months through August, the BLS shows an average of 74k private sector jobs were created, while ADP’s estimate was for 73k.
In September, ADP projects a loss of 29k private sector jobs, the most since March 2023. However, it showed a rebound of 42k in October.
The BLS also announced it will report September CPI on Friday so an annual cost-of-living adjustment can be determined for Social Security Meanwhile, comments from multiple Fed officials suggested that further easing is “far from a foregone conclusion.”
Morgan Stanley expects the U.S. dollar to weaken through the first half of 2026 before stabilizing later in the year, according to its latest year-ahead FX outlook.
The bank forecasts the DXY dollar index to drop from around 99.45 today to 94.00 by mid-2026, reflecting a period of elevated risk premium tied to concerns over U.S. labor market softness and uncertainty surrounding the Federal Reserve’s rate-cut trajectory.
Gold slipped below $4000 for the first time in a week but recovered to around $4050 in Europe. December WTI is consolidating within yesterday’s range (~$59.30-$60.45) and is knocking on $60 from below in late European morning turnover. GTCO Rises Softly, Investment Firm Sets N110 as Target Price
