The US dollar advanced broadly, showing resilience across the board, though the Japanese yen held firm ahead of an anticipated speech by the Bank of Japan (BOJ) deputy governor. The British pound remains the weakest among G10 currencies as it struggles amid domestic economic concerns. Notably, the Federal Reserve funds futures market has scaled back expectations of a single rate hike in 2025, reflecting shifting sentiment. Equities are under strain globally, with major Asia-Pacific indices declining over 1% in many cases, while US equity futures point to a bearish opening. Meanwhile, gold consolidates below $1,800, while February WTI crude has logged three weeks of consecutive gains, amassing a 10% increase.

Asia-Pacific Markets
The dollar experienced a volatile session last week, briefly moving outside Thursday’s range before closing within it, neutralizing a potential technical signal. Against the yen, the dollar dipped, testing levels slightly above JPY157.10 and breaching the 20-day moving average for the first time in nearly a month. Recent weakness in the yen, coupled with speculation about the BOJ raising its inflation forecast at this month’s meeting, has fueled chatter about a potential rate hike.

European Markets
The euro retreated to $1.0215 following the release of the US employment report, marking a significant retracement from its September 2022 rally.
Meanwhile, the British pound continued its downward slide, posting a fifth consecutive losing session. After peaking near $1.2575 last Tuesday, sterling fell to around $1.2100 during early European trading. Alongside the dollar’s strength, UK-specific factors weighed heavily on the currency, including rising concerns over fiscal policies, Labour’s tax proposals, and sluggish economic growth indicators.

American Markets
The Dollar Index climbed to nearly 110.00, buoyed by robust US labor data, and extended its rally to 110.20 today—a level not seen since November 2022. US Treasury yields remain firm ahead of upcoming inflation data, reinforcing the prevailing “buy-the-dip” mentality among dollar bulls. The Fed Funds futures market now projects the first rate cut to occur by mid-2026, reflecting a more cautious outlook on monetary policy shifts.