- US Dollar Index weakens as traders turn cautious ahead of key economic data delayed by the partial government shutdown.
- January US Nonfarm Payrolls are expected to show labor market stabilization, with 70,000 job gains and unemployment steady at 4.4%.
- Markets expect the Fed to hold rates in March, with cuts likely in June and possibly September.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, extends its losses for the second successive session and is trading near 97.60 during the Asian hours on Monday.
The Greenback struggles as traders adopt caution ahead of looming key economic data delayed by the partial government shutdown. The January jobs report, due Wednesday, is expected to signal stabilization in the labor market, with the US Nonfarm Payrolls to add 70,000 jobs, while the Unemployment Rate is seen holding steady at 4.4%. The postponed January consumer price index reading is scheduled for Friday.
However, market sentiment improved on Friday after preliminary figures showed the Michigan Consumer Sentiment Index unexpectedly rose to a six-month high. The index increased to 57.3 in February, marking a third straight monthly gain and exceeding expectations of 55.0.
Markets widely expect the Fed to leave interest rates unchanged in March, with rate cuts likely in June and possibly September. San Francisco Fed President Mary Daly said on Friday that the economy may stay in a low-hiring, low-firing phase, though it could shift toward no hiring and higher layoffs.
Fed Governor Phillip Jefferson said future policy moves will depend on incoming data and the broader economic outlook, adding that the labor market is gradually stabilizing. Meanwhile, Atlanta Fed President Raphael Bostic warned that inflation has remained elevated for too long, emphasizing in a Bloomberg interview that the Fed must remain focused on inflation risks.
