U.S. Dollar Edges Higher as Markets Await Jobs Data and Supreme Court Tariff Ruling

The U.S. dollar traded modestly higher on Friday, though overall foreign exchange market activity remained subdued as investors awaited two major catalysts: the release of the closely watched U.S. nonfarm payrolls report and a potential Supreme Court decision on President Donald Trump’s use of emergency tariff powers. The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.1% to 98.795, positioning it for a weekly gain of around 0.6%.

Market attention is firmly focused on the December U.S. jobs report, expected to show a mild rebound in employment growth as distortions from the recent government shutdown fade. Economists believe the data could play a key role in shaping Federal Reserve interest rate expectations. Any signs of resilience in the labor market would likely reduce pressure on the Fed to cut rates further. Analysts note that the unemployment rate may attract even more scrutiny than headline payroll figures, reflecting the central bank’s emphasis on job market slack. A dip in unemployment to around 4.5%, combined with payroll growth in the 50,000–100,000 range, would likely rule out a January rate cut and keep the probability of a March cut below 50%.

Adding to the day’s significance is the anticipated Supreme Court ruling on the legality of Trump-era tariffs. Market participants increasingly expect the court to rule against the administration’s tariff powers. Combined with a solid jobs report, such an outcome could provide modest support for the U.S. dollar, which has already priced in some positive momentum.

In Europe, the euro edged lower, with EUR/USD slipping to 1.1647 after data showed German exports unexpectedly fell in November, while industrial production surprised to the upside. The British pound also eased, with GBP/USD retreating from recent four-month highs. In Asia, the Japanese yen weakened despite stronger household spending data, while the Chinese yuan gained slightly after inflation rose to its strongest level in nearly three years. The Australian dollar continued to pull back from recent highs following weaker trade figures.

Overall, the combination of U.S. economic data and legal developments is expected to set the tone for currency markets in the near term, influencing dollar trends and broader FX volatility.