The U.S. dollar strengthened on Friday after fresh data pointed to slower-than-expected job growth in the United States, reinforcing expectations that the Federal Reserve may keep interest rates unchanged later this month.
Markets had also been preparing for a potential ruling from the Supreme Court of the United States that could overturn tariffs imposed by President Donald Trump. However, the court confirmed it will not issue a decision on the matter on Friday.
According to data released by the U.S. Labor Department, the economy created 50,000 jobs in December. This fell short of the 60,000 increase expected by economists surveyed by Reuters.
Following the release, the dollar edged higher against its major peers before giving up part of those gains as trading progressed.
The greenback climbed 0.72% to 158 against the Japanese yen and gained 0.25% to 0.801 versus the Swiss franc. Meanwhile, the euro slipped 0.22% to $1.1633, while the dollar index rose 0.27% to 99.14.
Steve Englander, head of global G10 FX research at Standard Chartered, said the payroll data may not significantly sway markets, noting that nonfarm payrolls typically carry a margin of error of around 20,000 jobs. He added that any Supreme Court ruling on tariffs would likely be the most impactful event for markets.
Trump relied on the International Emergency Economic Powers Act to impose tariffs without congressional approval. If the court ultimately rules against him, business leaders, customs brokers, and trade attorneys are preparing for potential legal battles to recover roughly $150 billion in tariff-related costs.
Englander warned that while the court could attempt to soften the financial consequences, a complete reversal of the tariffs could trigger a sharp negative reaction in the bond market.
Interest rate expectations continue to shift. Fed funds futures now indicate a 95% probability that the Federal Reserve will hold rates steady at its January 27–28 meeting, up from 68% just one month ago, according to the CME Group FedWatch tool.
