Dollar steady, range-bound as investors assess US labor data

NEW YORK – The dollar was steady against major currencies, including the yen and euro, on Wednesday amid market positioning around several US labor market data releases this week.

US job openings fell more than expected in November while hiring eased, according to Labor Department data, suggesting demand for labor continued to ebb.

Institute for Supply Management data showed that US services sector activity unexpectedly picked up in December, while private payrolls rebounded less than expected in December, according to the ADP’s national employment report.

The more comprehensive and closely watched nonfarm payrolls report is due on Friday.

The dollar was up slightly by 0.24% at 0.797 against the Swiss franc and edged 0.08% higher to 156.75 against the Japanese yen.

“The price action on the dollar right now is more tactical than anything else because without firm policy updates, there’s going to be a fade on the move that normally happens,” said Olivier Bellemare, senior options dealer at Monex Canada.

“The focus will be on the employment numbers at the end of the week, and the reason is that the market is still looking for signs of inflation as a more sticky indicator for directional positioning on the dollar against its peers.”

Oil prices fell on Wednesday and China denounced the US as a bully after President Donald Trump’s administration said it had persuaded Venezuela to divert supplies away from Beijing.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.07% to 98.68.

JAPAN-CHINA TENSIONS UNDER SPOTLIGHT

The euro edged down after falling the previous day, as German inflation eased more than expected in December, spurring traders to slightly scale back bets on a rate hike in early 2027.

Markets since last summer have been pricing policy rates to remain stable through 2026, while expecting the European Central Bank to tighten policy in 2027 as inflationary pressures build from German fiscal stimulus.

The single currency was down 0.04% at USD 1.1682, after falling 0.28% on Tuesday.

Also on traders’ radar: China on Tuesday banned exports of dual-use items to Japan that can be used for military purposes, marking Beijing’s latest reaction to an early November remark by Japanese Prime Minister Sanae Takaichi about Taiwan.

The move did not affect the foreign exchange market, strategists said, although it weighed on Japanese stock markets which lost 1% on Wednesday.

Some analysts said the rise in tensions between China and Japan could give the Bank of Japan a reason for caution in hiking rates again.

The Aussie dollar hit its highest since October 2024 at USD 0.6766, as a mixed inflation report kept alive the prospect of a near-term hike in interest rates. The New Zealand dollar was last down 0.14% at USD 0.5776.

“We think a risk-on macro backdrop in 2026, alongside a range of regional macro and valuation tailwinds, should support a constructive backdrop for both AUD and NZD versus the dollar this year,” Goldman Sachs analysts, led by Stuart Jenkins, said in an investor note.

(Reporting by Chibuike Oguh in New York; Editing by Mark Heinrich and Edmund Klamann)