USD holds firm close to its 200-day moving average as crucial US employment figures approach – BBH

US Dollar Holds Firm as Key Economic Data Looms

The US Dollar (ISD) remains stable, hovering close to its recent peak. According to BBH FX analysts, the dollar index (DXY) is currently trading just 0.3% beneath its 200-day moving average.

Potential for 2026 Rate Cuts as Labor Market Softens

Today’s releases of the December ADP employment figures and the November JOLTS report are closely watched for their policy implications. Market expectations are for ADP private sector payrolls to rise by 50,000, a rebound from November’s decline of 32,000. Despite this, ongoing worries about a weakening labor market persist, especially as the average job loss over the past three months stands at 13,000.

Additionally, if the JOLTS report shows further drops in both hiring and quit rates, it would reinforce the narrative of declining labor demand. Such developments would support the current market pricing of 50 basis points in Federal Reserve rate cuts for 2026, potentially putting downward pressure on the US Dollar.

On the services front, the ISM index for December is forecasted to signal continued strength in the sector, with a headline reading of 52.2 compared to November’s 52.6. However, if the prices paid component continues to fall, it could further bolster the case for additional Fed rate reductions.