The US dollar extended its advance on Friday, climbing to fresh multi-week highs. Markets will likely react with more volatility to the upcoming data.
The December nonfarm payrolls report could be pivotal for shaping expectations around monetary policy in 2026.
Forecasts point to a job growth of around 60,000, slightly below the previous 64,000 reading. Any material deviation from expectations could inject volatility into both forex and bond markets.
US treasury yields were broadly climbing ahead of the data, with the 10-year yield near 4.19%, supporting the dollar. Weaker-than-expected payrolls print would likely reinforce expectations for a more dovish Fed path next year, weighing on both the dollar and yields, while a stronger reading could challenge rate-cut expectations and provide further support to both.
Data released on Thursday painted a mixed picture of the US economy. Initial jobless claims rose modestly to 208,000, below expectations, while continuing claims increased more than expected. Meanwhile, the US trade deficit narrowed sharply to USD 29.4 billion in October.
Investors are also monitoring a potentially market-moving legal development. The US Supreme Court is expected to rule on whether President Donald Trump can invoke the International Emergency Economic Powers Act (IEEPA) to impose tariffs without congressional approval. The outcome adds another layer of uncertainty and could amplify market swings later in the session.
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