The US dollar remains stable, with the potential to achieve its strongest weekly performance since July

According to Jinshi's report, the US dollar held steady on Friday and is expected to record its strongest weekly performance since July, as expectations of a significant and early interest rate cut in the US weakened ahead of the highly anticipated non-farm payroll data. The strong start for the US dollar cast a shadow over the yen, which fell 2.5% against the US dollar in the first week of this year, marking its worst weekly performance since August 2022.

However, the rebound of the US dollar is expected to be tested by the non-farm payroll report to be released later. Moh Siong Sim, a foreign exchange strategist at Singapore Bank, said that market may have priced in a soft landing ahead of schedule at the end of last year. This week's data shows that the US job market seems to be holding steady, perhaps indicating that the Federal Reserve still needs to emphasize that maintaining interest rates will take longer than what has already been digested by markets.