The US dollar exchange rate was stable on Thursday amid escalating global geopolitical tensions, while investors assessed a range of economic data, with the US non-farm payrolls report due to be released on Friday being a key indicator of the performance of the US labor market and economy.
The euro held steady at $1.1678 in early Asian trading, heading for a slight weekly decline, while the British pound was at $1.34605. The Japanese yen also remained stable at 156.78 per dollar, as investors remained cautious and reluctant to make large bets ahead of upcoming data releases.
In other currency markets, the Australian dollar was at $0.6721, just below its highest level in 15 months, while the New Zealand dollar was steady at $0.5769 with little change.
Recent economic data showed that the US labor market is experiencing a relative slowdown, described as no hiring, no layoffs, with job openings declining more than expected in November, along with a slowdown in the pace of hiring.
In contrast, the US services sector saw unexpected growth in December, suggesting that the US economy ended 2025 in a relatively strong position, despite monetary pressures and tightening monetary policy in the past period.
Markets are currently focused on the non-farm payrolls report, which could directly influence expectations for the Federal Reserve's monetary policy. Traders anticipate at least two interest rate cuts in 2026, although the Fed hinted at its last meeting that it might only implement one.
The dollar index, which measures the performance of the US currency against a basket of six major currencies, settled at 98.737 points, on track for a slight weekly gain. 2025 was the dollar's worst year since 2017, and analysts predict continued pressure on the US currency in the coming period, albeit at a slower pace.
On the geopolitical front, markets appeared to have largely absorbed concerns related to US intervention in Venezuela, along with escalating tensions between China and Japan, which helped to temper reactions in currency markets.
