Investing.com – The US dollar edged higher on Friday, extending recent gains ahead of the release of a strong monthly jobs report, while sterling retreated.
At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% higher at 109.040, on the course for a weekly gain of 0.3%.
It was his sixth consecutive weekly gain, his longest streak since an 11-week streak in 2023.
Dollar maintains strength ahead of payments
The dollar was trading near its strongest levels since November 2022, building on recent gains as the US returned from a holiday to honor former President Jimmy Carter.
The focus was largely on data for December, due later in the session, as traders looked for more clues on the US economy and the future path of interest rates.
The Fed's December meeting, released on Wednesday, showed that policymakers remain concerned about the potential for inflation to rise again, especially given the potential impact of the expansionary and protectionist policies under President-elect Donald Trump.
US nonfarm payrolls data is expected to show the economy added 154,000 jobs in December on top of the 227,000 in November, holding at 4.2%.
Anything stronger would add to the case for fewer Federal Reserve rate cuts in 2025, boosting the dollar.
“We believe the balance of risks is tipping to the upside for the dollar today, as strong jobs figures could prompt markets to cut out in March and could be the first move push full price beyond June,” analysts at ING said in a note.
“We would still argue that with inflation concerns back on the rise – although the Fedspeak has been very different on that subject – next Wednesday's CPI report could have a deeper market impact. “
Sterling set for big weekly loss
In Europe, it edged higher to 1.0303, helped by data showing that it rose 0.2% in the month of November, an improvement from the previous month's decline of 0.3% and above the a drop of 0.1% was expected.
That said, the euro remains weak, with the European Central Bank widely expected to cut interest rates by around 100 basis points in 2025, roughly double the cuts expected by the US central bank, as the regional economy is still very weak.
“Markets are pricing a lot of negatives into the euro at this point, and the euro may be penalized less than other G10 currencies if US payments come in strong today,” ING said. .
trading 0.2% lower to 1.2285, with sterling on track to lose 1% this week after earlier falling to a 14-month low following a sell-off in UK government bonds amid concerns about British finance.
“We expect higher yields as a result of additional growth through domestic remortgage and weaker investment,” analysts at Goldman Sachs said in a note.
“The rise in gilt yields reinforces our view that UK growth will be disappointing in 2025, with our real GDP growth of 0.9% well below consensus (1.4%), the BoE (1.5 %) and the OBR (2%). “
Yuan has no support
In Asia, it rose 0.3% to 7.3513, with the Chinese currency seeing continued weakness after soft inflation data for December, released earlier this week.
The prospect of trade tariffs under Trump also caused sentiment toward China.
fell 0.1% to 157.85, with the Japanese currency helped by the release of stronger-than-expected data earlier on Friday.
This followed on from a bigger-than-expected rise in wage growth on Thursday, and has fueled more speculation over a January interest rate hike by the Bank of Japan.
