Last Friday, the US dollar rose strongly in volatile trading. Although employment growth in the United States slowed down in January, the unemployment rate dropped to 4.0%, providing strong evidence for the Federal Reserve to maintain interest rate stability until at least June. At the same time, US President Trump announced plans to impose equivalent tariffs on numerous countries this week, which, although not explicitly mentioning specific countries, has also contributed to the rise of the US dollar to some extent.
The US dollar index rose 0.353% at the close of the day, closing at 108.04. However, last week, due to the weakening of investors' concerns about global trade, the overall US dollar index showed a downward trend. The highly anticipated employment report released by the US Bureau of Labor Statistics shows that non farm jobs increased by 143000 in January, and the growth rate in December was revised up to 307000, while economists had previously predicted an increase of 170000 jobs in January.
FX Street senior analyst Joseph Trevisani pointed out, "Currently, there is no clear trend in non farm employment, neither showing a downward trend nor an upward trend, and the performance is relatively stable, so it is expected not to cause significant market fluctuations
Last Friday, investors' concerns about global trade once again heated up. Trump has promised to impose more tariffs as part of his wide-ranging measures, and he has also stated that this will help address the US budget issue. Trump announced this news during a meeting with visiting Japanese Prime Minister Shigeru Ishiba and revealed that the car tariffs are still under discussion, following reports that the White House is considering possible exemption options.
In other performances in the foreign exchange market, the pound fell 0.2% to $1.2413 against the US dollar. Last Thursday, the pound fell 0.54% against the US dollar, mainly due to the Bank of England lowering interest rates to 4.5% and predicting that the UK economy would only grow by 0.75% this year, which is only half of the previously expected growth rate. After the announcement of the Bank of England's decision, the pound fell by 1.1% at one point, but then Bank of England Governor Bailey told Bloomberg News that the market should not overinterpret the support of some decision-makers for a larger interest rate cut, and the pound's decline narrowed as a result. The euro fell 0.49% to $1.0333 at the end of trading in New York.
The US dollar fell 0.09% against the Japanese yen, to 151.365. Previously, the US dollar fell below 151 yen for the first time in early Asian trading since December 10th. This is mainly because the market is betting that the Bank of Japan's interest rate hike this year will exceed previous expectations, and the wage data released earlier this week further supports this bet. Bank of Japan reviewer Naoki Tamura stated last Thursday that the central bank must raise interest rates to at least 1% in the second half of the 2025 fiscal year, further fueling expectations of rate hikes. Naoki Tamura is one of the more hawkish members of the Policy Committee. Mizuho analyst Yamamoto said that Naoki Tamura is more hawkish than ever before, and the possibility of the Bank of Japan delaying interest rate hikes until September is small.
Looking back at the early days of the Trump administration, investors have been in a state of tension. Last week, Trump suspended the planned tariffs on Mexico and Canada at the last minute. US Treasury Secretary Benson stated in an interview with Fox Business Channel last Wednesday that although Trump wants to lower interest rates, he will not demand a rate cut from the Federal Reserve, and both he and the president are closely monitoring the 10-year Treasury yield.
