Market comment on behalf of Tito Iakopa – Commercial Director at FlowCommunity
6th February 2025
The US dollar traded within a narrow range as investors have adopted a cautious approach ahead of today’s job reports and tomorrow’s Nonfarm Payrolls (NFP) report, which could provide crucial hints on the Fed’s next move.
If the NFP figures mirror the strength of the ADP Employment Change, it could reinforce a hawkish Fed stance, supporting the dollar. Conversely, weak figures could fuel selling pressures.
Markets continue to price in a 50 basis-point rate cut by year-end. If interest rates continue to decline, the dollar could come under pressure, while a more conservative approach from the Fed could support the currency.
Meanwhile, U.S. Treasury yields recovered slightly after recent declines. The 10-year note fell below the 4.5% mark for the first time since December, following comments from Treasury Secretary Scott Bessent, who expressed a preference for lower longer-term yields.
Elsewhere, the Bank of England’s rate decision is in focus, with traders anticipating a 25 basis-point cut. If this is confirmed, it could increase the appeal of the dollar against the pound.
