The dollar rose faster than U.S. nonfarm payrolls data that could provide hints about the timing of the Federal Reserve’s next rate cut.
The balance of risk is tilted towards dollar gains as potentially robust employment data “could prompt markets to price out a rate cut in March and potentially extend the first fully priced move beyond June,” ING’s Francesco Pesole said in a note.
If the data is weaker than expected, investors could unwind long positions in the dollar that are betting on its rise. However, these longs could build at better levels ahead of key upcoming data and Donald Trump’s presidential inauguration on January 20. Job details are due at 8:30 AM Eastern Time.
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