The US dollar is seen maintaining its high momentum for the fourth consecutive day, as players are now digesting the release of US labor data and the US Supreme Court's decision on President Donald Trump's use of emergency tariff powers.
At 10 am, the US Dollar Index (DXY) was at 98.990 points, up 0.15% since it opened in early trading Friday in the Asian session.
The upcoming US Non-Farm Payrolls (NFP) report for December is expected to provide a clearer picture of the labor market, after previous economic data was affected by the government shutdown.
However, analysts are of the view that the details of the data may not be much help in determining the direction of interest rates.
Analysts at ING said the market is likely to be more tolerant of weak payrolls, as long as there are no major surprises in the data. According to them, the unemployment rate is seen as a more influential component than the number of jobs added alone.
Meanwhile, weekly jobless claims data released on Thursday showed a small increase in jobless claims, suggesting the US labor market remains stable despite some pressure.
In monetary policy developments, Federal Reserve (Fed) funds futures now point to an 89% probability that the US central bank will keep interest rates on hold at its meeting on January 27-28, up sharply from 68% a month ago, according to CME Group's FedWatch tool.
At the same time, market attention is also on the US Supreme Court, which could announce a decision on whether Donald Trump can use the International Emergency Economic Powers Act (IEEPA) to impose tariffs without congressional approval.
The decision risks changing the direction of US trade policy and disrupting months of negotiations.
If the ruling goes in Trump's favor, the US government could face up to $150 billion in back taxes, with company executives, customs brokers and trade lawyers reportedly bracing for a protracted legal battle.
