US jobs report the main event on the agenda today

Given the backdrop, it will be a placeholder session in European morning trade today. The bond market has already looked to have made up its mind on the week here. And it’s now time to look to the US jobs report for vindication.

The dollar is still in a vulnerable spot as such, especially with USD/JPY flirting with a potential breakdown towards 150.00 next. The pair briefly dipped under 151.00 today but is bouncing back modestly, now up 0.2% to 151.76. That being said, the downside pressure remains on a break under both its 100 and 200-day moving averages:

Going back to the non-farm payrolls data later, it’s not so much about how it will be impacting the immediate Fed outlook.

We know the Fed is not going to be cutting interest rates in March. And in fact, traders are only pricing in the first rate cut for July at the moment with ~43 bps of rate cuts for the year.

The thing about the jobs report today is that market players are looking for it to be a springboard to bounce off after having dealt with the scare from earlier this week. Trump’s tariff threats might seem a long time ago but it was only on Monday that it seemed like all hell was about to break loose.

The dollar opened with a gap higher then and equities were hammered before finding a relief as Trump delayed tariffs to Canada and Mexico.

Broader markets have already largely shaken that off but this will just be the cherry on top of a good recovery week for risk trades.

• January non-farm payrolls preview by the numbers: Positive signs abound
• Goldman Sachs non-farm payroll preview – the underlying labor market remains solid
• US January 2025 non-farm payrolls data – the critical key ranges for estimates to watch

This article was written by Justin Low at www.forexlive.com.