The US dollar index (DXY) climbed for the fourth consecutive day on Friday, crossing the 99.00 mark for the first time in four weeks. This rise in the dollar is attributed to cautious market sentiments, particularly centered around President Trump’s tariffs and upcoming payroll data set for release in December.
This week, the dollar increased by 0.60% and is poised for a gain of over 1% in the past fortnight, marking it as the strongest currency among major players so far in 2026. The ongoing moderate risk-off trend has significantly bolstered the US dollar recently, coinciding with rising geopolitical tensions across various global regions.
Trump’s Tariffs Take Center Stage Again
Market participants are anxiously awaiting a US Supreme Court ruling on whether President Trump can use the International Emergency Economic Powers Act from 1977 to impose trade tariffs on a majority of the nation’s trading partners.
In addition, US legal teams are preparing to claim around $150 billion in taxes on imports already paid by companies if the court rules against them, as reported by data from Reuters.
On another note, the US Bureau of Labor Statistics (BLS) is set to release its December non-farm payroll report at 1:30 p.m. Japan time. Employment is forecasted to rise moderately, with an anticipated addition of 60,000 jobs in December, following an increase of 64,000 jobs in November. The unemployment rate is expected to dip to 4.5% from 4.6% last month.
Unless these figures vary drastically from what the market expects, it’s unlikely to resolve ongoing disagreements among Federal Reserve officials regarding the pace of monetary easing. Current futures markets reflect a 13% probability of a rate cut post the Jan. 27-28 meeting, with the likelihood of a March rate cut adjusting downward to 36.5% from 44% a week earlier.
