The US Dollar Index (DXY), which tracks the US Dollar against a basket of six major currencies, continued to drift lower for a second straight session, hovering around 97.60 during Asian trading on Monday.
The greenback remains under pressure as investors stay cautious ahead of important economic releases that were pushed back due to the partial government shutdown. Attention is now on the January jobs report, scheduled for Wednesday, which is expected to point to some stabilization in the labor market. Nonfarm Payrolls are forecast to rise by 70,000, while the Unemployment Rate is expected to remain unchanged at 4.4%. The delayed January Consumer Price Index report is due on Friday.
Sentiment improved slightly late last week after early data showed US consumer confidence rising more than expected. The University of Michigan Consumer Sentiment Index climbed to 57.3 in February, its highest level in six months, marking a third consecutive monthly increase and beating forecasts of 55.0.
Markets largely expect the Federal Reserve to keep interest rates unchanged at its March meeting. Traders are currently pricing in potential rate cuts starting in June, with another possible move later in September. San Francisco Fed President Mary Daly said on Friday that the economy may continue in a phase of slow hiring and low layoffs, though she noted risks of weaker hiring conditions ahead.
Fed Governor Phillip Jefferson reiterated that future policy decisions will depend on incoming data and overall economic trends, adding that the labor market appears to be gradually finding balance. At the same time, Atlanta Fed President Raphael Bostic cautioned that inflation has remained too high for too long, stressing in a Bloomberg interview that the central bank must stay alert to inflation risks.
