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The dollar's rally is being held back by expectations of interest rate cuts, as the market awaits the jobs report
Lee Hardman of Mitsubishi UFJ Bank said in a report that unless Friday’s U.S. nonfarm payrolls data is strong enough to prompt the market to reassess expectations for interest rate cuts, the dollar’s gains are likely to be limited. According to LSEG data, the market sees a 50% probability of a rate cut in March and a 70% probability in April, but does not fully price in a rate cut until June. Hardman noted: “Private-sector job growth would likely need to rebound to over 100,000 per month to prompt U.S. interest rate market participants to push back the timing of further rate cuts and provide more support for the dollar early this year.”
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