Asian session review: the US dollar stabilized against major currencies

During today's Asian trading, the US dollar consolidated against major currencies as investors took a wait-and-see attitude ahead of the publication of a key report on the US labor market.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.03% to 102.86 (the lowest value since January 15). Since the beginning of the week, the index has fallen by 0.97% amid increased expectations of easing the Fed's monetary policy at the June meeting after statements by Central Bank Chairman Powell. Today, the nonfarm payrolls report for February will be in the focus of investors' attention, which may confirm or deny the current market expectations regarding rate cuts. In January, the nonfarm payrolls surprised with growth and increased by 353 thousand. The unemployment rate remained unchanged (3.7%), while average hourly earnings increased sharply (+0.6% m/m, which was twice the consensus forecast). Overall, the impressive employment report for January showed that the labor market, although cooling, is holding up surprisingly well despite the tightening of monetary policy. Moreover, an upward revision of the data for previous months indicated a higher rate of employment growth over the past few months than previously reported. However, the employment growth of more than 300 thousand, observed over the past two months, is unlikely to be repeated in February. Initial and continuing jobless claims remain at a low level, but overall they have increased slightly in recent weeks. This increase indicates that the labor market may have lost some momentum in February. Nevertheless, the pace of hiring remains strong, and experts expect that employment increased by 200 thousand in January. In addition, the unemployment rate is expected to remain unchanged (3.7%), and the growth of average hourly earnings slowed to 0.3% amid normalization of supply and demand for workers.

The yen rose another 0.1% against the US dollar after jumping 0.9% yesterday, as expectations mounted that the Bank of Japan (BOJ) could finally exit negative interest rates this month. Yesterday, BOJ Governor Kazuo Ueda and board member Junko Nakagawa said the Japanese economy was moving towards the central bank's 2% inflation target, while the country's largest trade union group said the average wage hike demand hit 5.85% for this year, topping 5% for the first time in 30 years. Since the beginning of the week, the yen has gained 1.5%, which is the most significant increase since December.