The core event covered in both articles is the release of weaker-than-expected US Nonfarm Payrolls (NFP) data for February, which showed a decline of 92,000 jobs, missing estimates for a 59,000 increase. The Unemployment Rate rose from 4.3% to 4.4% [1][2]. January's NFP figure was also revised lower to 126,000 from 130,000 [2]. Despite the disappointing jobs data, the US Dollar (USD) remained resilient, supported by risk aversion stemming from escalating geopolitical tensions in the Middle East, particularly between the United States and Iran [1][2].
USD/JPY rose over 0.20% on Friday, challenging the 158.00 level and trading at 157.73, with technical indicators such as the RSI at 61 signaling firm bullish momentum. The pair is riding a sequence of higher daily lows and trades above key moving averages, suggesting buyers retain control in the near term. Immediate resistance is near 157.70, with a sustained break potentially opening the way toward 159.20. Initial support is at 156.10, with deeper support at 154.70 and 152.10 [1]. Bank of Japan Deputy Governor Ryozo Himino commented that the central bank is vigilant about Yen moves due to their impact on core inflation [1].
GBP/USD, meanwhile, traded around 1.3362 and was on course for a third straight weekly decline. The pair consolidated after a brief spike post-NFP, as the USD continued to attract safe-haven flows. The US Dollar Index (DXY) traded around 99.10, up nearly 1.50% for the week [2]. The weak jobs data was overshadowed by geopolitical tensions and rising Oil prices, which are increasing inflation risks. This has led traders to believe central banks may keep rates higher for longer, tempering hopes for near-term rate cuts. The probability of a 25 bps Bank of England rate cut in March dropped to 20-30% from 80% before the conflict, lending modest support to the Pound [2].
Money markets saw the odds of a 25-basis-point Fed rate cut rise from around 35% to 50% after the jobs data, according to Prime Market Terminal [1]. However, CME FedWatch Tool shows traders have trimmed expectations for Fed rate cuts, with markets nearly certain the Fed will keep rates on hold in March and the probability of a June cut falling to 35% from 45% a week ago [2]. San Francisco Fed President Mary Daly stated that both goals are at risk, the job market is vulnerable, and policymakers need to remain patient, favoring holding rates steady while collecting more information. Daly also noted that strikes, snow, and population benchmarking make the NFP report harder to interpret, and whether rising Oil prices delay rate cuts depends on the duration of the disruption [1][2].
US Retail Sales contracted 0.2% MoM in January, better than the expected 0.3% fall, following a flat reading in December. The Retail Sales Control Group rose 0.3%, while Retail Sales excluding Autos remained unchanged at 0% [1][2].
CONCLUSION
Despite weak US jobs data, the US Dollar remained firm, buoyed by risk aversion amid escalating Middle East tensions. Market participants have tempered expectations for near-term rate cuts from both the Federal Reserve and Bank of England, with central bank officials signaling caution and patience. Technical and sentiment indicators suggest continued USD strength, particularly against the Yen, while the Pound finds modest support from repriced rate cut odds.