The US Dollar Index edged down to 99.1 on Wednesday, paring some of the previous session’s gains as investors assessed mixed labor market signals ahead of Friday’s closely watched nonfarm payrolls report.
Dollar eases as markets weigh mixed labor data
ADP data showed private businesses added just 37,000 jobs in May, the weakest hiring pace since March 2023 and well below forecasts of 115,000, raising concerns about a potential slowdown in job creation. In contrast, the JOLTs report revealed that job openings unexpectedly rose to 7.39 million in April, up from March’s revised 7.2 million and beating expectations of 7.1 million, indicating that demand for labor remains relatively strong despite broader economic uncertainties.
These conflicting signals have left markets uncertain about the health of the labor market and the Federal Reserve’s policy trajectory. Fed officials have largely signaled support for holding interest rates steady for now, citing trade-related risks and a need for more consistent economic data before making further policy moves.
Trump calls for aggressive rate cuts
This cautious stance persists despite ongoing pressure from President Trump, who has continued to call for aggressive rate cuts to stimulate growth and support exports.
Trade tensions have also remained a key market focus, with the new 50% tariffs on steel and aluminum imports officially taking effect today. The implementation of these measures has raised concerns about cost pressures on domestic manufacturers and potential retaliatory actions from key trading partners. Overall, the mixed labor data, policy uncertainty, and heightened trade frictions have contributed to a more cautious tone in currency markets, putting slight downward pressure on the dollar.
