Dollar on defensive as traders eye delayed US jobs data

The U.S. dollar sagged to near a two-month low at the start of the Asian trading session on Tuesday as markets awaited the release of a slew of economic data, including the delayed November U.S. jobs report. The dollar index, which measures the currency's strength against a basket of six key rivals, was down 0.2% at 98.261, approaching the lowest levels since October 17. The Bureau of Labor Statistics will release its long-awaited combined employment reports for October and November later, following delays to data collection during the longest U.S. government shutdown in history, while a raft of preliminary manufacturing indicators are also due for release. The jobs data "will help give closure on how U.S. employment conditions were panning out during the federal government shutdown," Paul Mackel, global head of FX research at HSBC, wrote in a research report. "The Fed’s messaging last week gave us reassurance that the broad USD is not out of the woods yet." Fed funds futures are pricing an implied 75.6% probability of a hold in rates at the U.S. central bank's next meeting on 28 January, unchanged from a day earlier, according to the CME Group's FedWatch tool.

Markets will have to contend with a host of other policy catalysts during the week with several central bank decisions due, including the Bank of Japan, which is expected to hike rates by 25 basis points to 0.75%, while the Bank of England may make an equal-sized cut to 3.75%.

The European Central Bank is expected to keep interest rates on hold, alongside Sweden's Riksbank and Norway's Norges Bank.

Against the yen, the dollar eased 0.1% to 155.07 yen, as traders braced for the BOJ's decision on Friday.

The euro was steady at $1.17535 as peace talks to end the war in Ukraine made progress, with United States offering to provide NATO-style security guarantees for Kyiv. The British pound was flat at $1.3376.

Against the Chinese yuan trading offshore, the dollar was flat at 7.0371 yuan, its weakest levels since October 3 2024.

The Australian dollar edged up 0.1% to $0.66445, though the currency was little changed following a private survey showing that consumer sentiment slid in December after turning positive for the first time the previous month. The kiwi dollar added 0.1% to $0.5788.

Both the Australian and New Zealand central banks have shut the door on any further rate cuts, providing momentum to the Antipodean currencies.

Cryptocurrency markets made tepid gains after a pullback on Monday. Bitcoin was up 0.2% at $86,420.67, while ether= edged 0.6% higher at $2,963.54.

-Gregor Stuart Hunter/Reuters