The U.S. dollar weakened against major currencies on Tuesday after delayed economic data showed job growth exceeding expectations, prompting markets to reassess the Federal Reserve’s willingness to continue cutting interest rates in the near term.
Dollar slips after delayed U.S. jobs data
According to Labor Department figures, the U.S. economy added 64,000 jobs in November, beating forecasts from economists surveyed by Reuters. This followed a sharp loss of 105,000 jobs in October. The release of the employment report had been postponed due to the 43-day U.S. federal government shutdown.
Following the data, the dollar eased against most of its peers. It was last down 0.26% against the Swiss franc, trading at 0.79435.
Market participants described the data as mixed. Hiring was slightly stronger than expected, but not strong enough to significantly shift expectations. At the same time, the unemployment rate rose from 4.4% to 4.6%, raising concerns about underlying labor market momentum.
Fed rate outlook remains cautious
Rising unemployment has increased uncertainty around the Federal Reserve’s policy path. Futures markets now indicate a 73.4% probability that the Fed will hold interest rates steady at its January 28 meeting, up from nearly 70% just one week earlier, according to CME Group’s FedWatch tool.
Analysts also noted that most job gains came from non-cyclical sectors such as healthcare, suggesting limited improvement in broader economic activity. As a result, markets viewed the report as neutral rather than decisively positive.
The dollar index, which tracks the greenback against a basket of major currencies including the euro and yen, fell 0.22% to 98.05. The index is now heading for a second consecutive daily decline.
Central bank decisions drive currency moves
Attention has shifted to a busy week for global central banks. The European Central Bank is widely expected to keep interest rates unchanged on Thursday. Mixed economic data from the euro zone supported the ECB’s higher-for-longer stance and helped lift the euro.
German investor sentiment rose more than expected in December, while euro zone business activity growth slowed toward the end of 2025. The euro climbed 0.3% to $1.1788, reaching its highest level since September and extending gains for a fifth straight session.
In the United Kingdom, the Bank of England faces a closely divided rate decision. Markets expect a narrow vote, with Governor Andrew Bailey potentially tipping the balance toward a rate cut. Sterling rose 0.39% to $1.3425, its highest level in two months, ahead of Thursday’s announcement.
Yen, Nordic currencies and crypto in focus
In Japan, a rate hike from the Bank of Japan is largely priced in. However, analysts cautioned that concerns over fiscal policy could limit any upside for the yen. The dollar fell 0.38% to 154.615 yen ahead of the BoJ’s decision on Friday.
Big Japanese manufacturers reported the strongest business sentiment in four years, reinforcing expectations for further policy tightening beyond the spring wage talks.
Meanwhile, Sweden’s Riksbank and Norway’s Norges Bank are both expected to leave rates unchanged this week. The Swedish crown strengthened slightly against the dollar, while the greenback gained against the Norwegian krone.
In cryptocurrency markets, bitcoin rose 1.14% to $87,212.46, ending a four-session losing streak. Ether slipped 0.51% to $2,929.19.
