## Market Awaits Dollar's Next Move Amid Policy Uncertainty and Economic Data

Traders braced for a consequential Friday as the U.S. dollar climbed amid market participants' expectations surrounding both the upcoming employment figures and a pivotal Supreme Court decision on tariff authority. The dollar index gained 0.2%, settling at 98.883, extending its winning streak to three consecutive sessions as investors positioned for potential volatility.

### The Jobs Report Puzzle

The December non-farm payrolls data looms large, yet economists at ING caution that the numbers may offer less clarity than investors hope. With a 30-year-high interest rate decision from the Bank of Japan already in the rear-view mirror and markets now anticipating the Federal Reserve's next move, the labor data takes on added significance—though perhaps not in the way traditional market participants expect.

CME FedWatch data reveals a striking shift in sentiment: the probability of the Fed holding rates steady at its January 27-28 meeting has climbed to 89%, up sharply from 68% just a month prior. This 21-percentage-point swing underscores how dramatically market expectations have shifted. Weekly jobless claims ticked higher on Thursday, signaling potential softening in labor market conditions that may justify the Fed's cautious stance.

ING's analysts noted that the unemployment rate could ultimately matter more than headline job creation figures, a sentiment reflecting the nuanced view many professionals now hold about economic momentum.

### Supreme Court Tariff Ruling Casts Shadow

Beyond employment data, traders closely monitor the Supreme Court's forthcoming decision on whether President Trump can unilaterally deploy the International Emergency Economic Powers Act (IEEPA) to impose tariffs. A negative ruling could reshape trade negotiations and potentially trigger upward of $150 billion in duty refund discussions between businesses and the government—a scenario that adds material uncertainty to currency markets.

### Currency Movements Track Risk Sentiment

Against the Japanese yen, the dollar held relatively stable at 156.885. Japan's November household spending data exceeded expectations, reinforcing the case for the Bank of Japan's recent tightening and Governor Kazuo Ueda's signals of potential further rate increases ahead.

The offshore Chinese yuan remained anchored at 6.982 as traders anticipated the release of China's December inflation readings. Meanwhile, major currencies showed muted movement during early Asian trading: the euro stood unchanged at $1.1657 ahead of German and eurozone economic data, the British pound dipped 0.1% to $1.3436, the Australian dollar held at $0.6698, and the New Zealand dollar edged down 0.1% to $0.5749.

### Crypto Markets React to Broader Sentiment

In digital assets, Bitcoin traded at $96.91K with a 24-hour gain of +1.95%, while Ethereum rose to $3.37K, up 2.19% over the same period. These movements reflect broader market sentiment as investors weigh the implications of the policy decisions ahead.

The convergence of jobs data, tariff rulings, and Federal Reserve expectations ensures that market participants will remain on high alert through the end of January.