The USD is higher ahead of the US jobs report

The U.S. dollar is moving to the upside, with the Dollar Index climbing to its highest level in about a month and notable strength against the JPY (up 0.45%). The greenback is also higher vs the other major currency pairs with USD up 0.11% vs the EUR and 0.19% vs the GBP.

The AUDUSD is trading down -0.33% (higher USD) as it reacts to:

• Weak Trade Data: Australia’s trade surplus narrowed sharply to AUD 2.94 billion in November (well below the AUD 4.9 billion forecast). This was driven by a 2.9% drop in exports.

• China Inflation Miss: China, Australia’s largest trading partner, released December CPI data showing only a 0.8% rise, missing the 0.9% forecast. This suggests weak demand from China, which is always a bearish signal for the Aussie.

• Cooling Inflation: Recent Australian CPI data showed a slowdown to 3.4%. While this is good for consumers, it has led markets to scale back expectations for a February interest rate hike from the RBA, removing a key support for the currency.

Meanwhile, the NZDUSD is lower by -0.45%

The NZD is currently trading near its lowest levels since early December, influenced by:

• Technical Breakdown: The NZD/USD pair recently broke through support levels (around 0.5750) and is currently facing “Strong Sell” technical signals as momentum shifts downward.

• RBNZ Stance: The Reserve Bank of New Zealand (RBNZ) has signaled that its easing cycle likely ended in 2025, but Governor Anna Breman has pushed back against near-term rate hikes. This “on-hold” stance makes the NZD less attractive compared to a rebounding US Dollar.

• Geopolitical Jitters: Heightened tensions in South America and between China and Japan are weighing on the “Kiwi,” which typically suffers when global risk appetite declines.

Treasury yields are edging higher helping to support the USD with the:

• 2 year yield at 3505, up 1.7 basis points.
• 5 year yield 3.7499% +1.4 basis points
• 10 year yield 4.15%, +0.2 basis points
• 30 year yield 4.847%, -1.0 basis points

In commodities,

• Gold is trading up $13.77 or -0.31% that $4464
• Silver is trading up $0.64 or 0.84% at $77.62.
• Oil is trading up $0.51 at $58.29
• Bitcoin is trading down $747 and $90,284

U.S. stock futures are mostly higher early Friday as markets head into a potentially pivotal day, with investors watching two major risk events: a possible Supreme Court ruling on President Trump’s tariffs and the December nonfarm payrolls report. The Supreme Court is scheduled to meet today, fueling speculation that a decision on the legality of several sweeping tariffs could come soon. While the court does not pre-announce rulings—and a decision could still be weeks or months away—the issue remains a meaningful overhang for markets given the potential implications for U.S. companies, global trade flows, and government tariff revenue.

Attention is also firmly on the December jobs report due at 8:30 a.m. ET. Labor market data will be closely scrutinized for signs of cooling that could support the case for further interest-rate cuts later this year. Economists surveyed by the Wall Street Journal are looking for job growth of roughly 73,000 in December, with the unemployment rate expected to tick lower to 4.5%. Any meaningful deviation from expectations could spark volatility across rates, equities, and FX.

Looking at the major indices, the futures are implying

• Dow industrial average rose 2.11 points
• S&P index is up 7.04 point
• NASDAQ index is up 40 points

This article was written by Greg Michalowski at investinglive.com.