Investing.com – The US dollar rose slightly on Friday, extending recent gains ahead of the release of the highly influential monthly jobs report, while the pound continued to fall.
As of 04:00 ET (09:00 GMT), the dollar index, which tracks the U.S. dollar against a basket of six other currencies, was trading 0.1% higher at 109.040, on track for a weekly gain of 0.3%.
This is the sixth consecutive week of increases and the longest since 2023, when prices rose for 11 consecutive weeks.
Dollar maintains strength ahead of employment report
The dollar sustained recent gains, trading near its strongest level since November 2022, as the US returns from a holiday commemorating former President Jimmy Carter.
The focus was on December data, which will be released in late trading, as traders looked for further clues about the U.S. economy and the future direction of interest rates.
The Fed's December meeting report released on Wednesday shows that inflation could flare up again, especially given the expected impact of expansionary and protectionist policies under President-elect Donald Trump. It shows that policymakers continue to be concerned about gender.
U.S. nonfarm employment data is expected to show the economy added 154,000 jobs in December, on top of 227,000 in November, holding steady at 4.2%.
If this is strong, it will increase the likelihood that the US Federal Reserve (Fed) will reduce its rate cuts in 2025, and the dollar will appreciate.
Analysts at ING said, “The balance of risk is tilted towards the dollar today as strong employment data prompts the market to price in a March interest rate cut, and the first full rate cut may be postponed until June or later.'' I think it's leaning toward.” Note.
“Although FedSpeak is very mixed on this topic as inflation concerns rise again, we would still argue that next Wednesday’s CPI report could have a deeper impact on the market. ”
Pound expected to suffer heavy losses for the week
In Europe, prices edged up to 1.0303, boosted by data showing a 0.2% month-on-month rise in November, improving from the previous month's 0.3% decline and beating expectations for a 0.1% decline.
That said, the European Central Bank is widely expected to cut interest rates by around 100 basis points in 2025, about double the rate cut expected by the US central bank, and the region's economy remains very weak. , the euro remains weak.
ING added: “Markets are pricing in significant negatives for the euro at this stage, and if the US jobs report turns out to be positive today, perhaps the penalty for the euro could be lower than for other G10 currencies.”
The pound is trading 0.2% lower at 1.2285, with the pound on track to fall 1% this week after falling to a 14-month low on a slide in British government bonds due to concerns about Britain's finances.
“We expect higher yields to provide further headwinds to growth through household refinancing and weaker investment,” Goldman Sachs analysts said in a note.
“The rise in gold yields reinforces our view that UK growth will disappoint in 2025, with our real GDP growth forecast of 0.9%, compared to the consensus (1.4%) and the BoE (1.5%), which is significantly lower than OBR (2%).”
Renminbi lacks support
In Asian markets, the Chinese currency continued to fall, rising 0.3% to 7.3513, following weak December inflation data released earlier in the week.
The prospect of trade tariffs under the Trump administration also soured sentiment toward China.
Stronger-than-expected data released early Friday supported the Japanese currency, which fell 0.1% to 157.85.
This follows a better-than-expected rise in wages on Thursday, increasing speculation that the Bank of Japan will raise interest rates in January.
