The US dollar strengthened against most major currencies early Friday as markets braced for December’s employment data, set for release at 8:30 am ET. Nonfarm payrolls are forecasted to increase by 165,000, with the unemployment rate expected to hold steady at 4.2%.
Wage growth is also under the microscope, with hourly earnings projected to climb by 0.3%, a slight decline from November’s 0.4% increase. Market watchers will also focus on updates such as the University of Michigan consumer sentiment index at 10:00 am ET and the St. Louis Fed’s GDP Nowcast estimate later in the day.
Forex Market Movements
The US dollar’s performance varied across major trading pairs ahead of these pivotal announcements:
- USDEUR edged down slightly to 1.0301, compared to 1.0302 at Thursday’s US close. This minor dip came amid a quiet day for the Eurozone, with no significant data releases scheduled. The next European Central Bank meeting on January 30 remains a key event for euro traders.
- GBPUSD slipped to 1.2303 from 1.2311, though it held above the Thursday morning level of 1.2289. As with the euro, no major UK economic data are expected Friday, with the focus turning to the Bank of England’s policy meeting on February 6.
- USDJPY dropped to 158.0103 from 158.1247 at Thursday’s close. Japanese consumer sentiment saw a decline in January, with modest growth in household spending and a drop in November’s leading economic index. The Bank of Japan is set to meet on January 23-24, where discussions on economic challenges will likely take center stage.
- USDCAD climbed to 1.4408 from 1.4389 on Thursday. Canadian December employment data, due at 8:30 am ET, will share the spotlight with the US employment report. Traders are also eyeing the Bank of Canada meeting on January 29 for policy cues.
What to Watch
With the forex market tightly linked to employment and economic growth data, Friday’s announcements could significantly shift sentiment. Dollar strength will likely depend on whether US payrolls and earnings meet or exceed expectations, while consumer sentiment and GDP forecasts could add further volatility to the trading day.
As the day unfolds, forex participants will stay alert for any surprises in the economic data, especially with central bank meetings on the horizon for the Eurozone, UK, Japan, and Canada.
