USD weakened slightly against other major currencies in the European session on Friday as investors waited for the release of a crucial report on the U.S. employment situation for January later in the day, which might shed more light on when the Federal Reserve could start monetary policy easing.
The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, slipped by 0.06% from the previous close to 102.99.
The closely watched jobs report will be released at 13:30 GMT. Economists expect it will show that the U.S. added 180,000 new jobs last month, down from 216,000 in December, while an unemployment rate edged up to 3.8% from 3.7%, and average hourly earnings grew 0.3% MoM, easing slightly from 0.4% MoM in the previous month.
A more significant change in the pace of average hourly earnings could impact inflation dynamics and the Fed’s rate forecasts over the coming months.
Speaking at a post-meeting press conference on Wednesday, the Fed’s chairman Jerome Powell stated that a March rate cut seems unlikely.
According to the CME FedWatch tool, markets are now pricing in a 34.5% chance of a 25-basis-point rate reduction next month, sharply down from 69.6% a month ago, and a 90.3% probability of the move in May.