US dollar deepens losses to four-month low before labor data

The US dollar fell in European trade on Friday against a basket of major rivals, widening losses for the fifth straight session and hitting a four-month low, and on track for the heaviest weekly loss since 2022. 

It comes amid positive sentiment in the markets after the announcement of a massive German stimulus plan, while Trump decided to delay his tariffs on Canada and Mexico for a month.

Now investors await important US jobs data, which will provide clues on the path ahead for US interest rates.

The Index

The dollar index fell 0.55% to 103.56, the lowest since November 5, with a session-high at 104.24.

On Thursday, the index lost 0.15%, marking the fourth daily loss in a row.

Weekly Trades

The index is down 3.7% so far this week, on track for the heftiest weekly loss since November 2022.

Positive Sentiment 

The markets are awash with positive sentiment after German coalition parties announced plans to set up an infrastructure fund valued at 500 billion euros and change borrowing rules to boost military spending and growth.

Otherwise, the White House announced exemptions to some automakers from the 25% tariffs on Canada and Mexico for a month.

US Rates

Fed Governor Christopher Waller said on Thursday said he’s strongly against a rate cut at the Fed’s March meeting, even as he thinks that rate cuts later this year could be appropriate if inflation continues to peter out.

New York Fed President John Williams said the US tariffs will likely push inflation higher, but he believes current interest rate policies are suitable and don’t require changes.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in March stood at just 5%.

US Jobs

Later today, investors await a batch of crucial US jobs data, with the US economy expected to have created 159 thousand new jobs last month, up from 143 thousand in January, while unemployment is expected to remain at 4.0%.