The US private sector added 22,000 jobs in January, which is below the expected 48,000. In contrast, the ISM Services PMI matched the previous month’s value of 53.8, slightly exceeding expectations of 53.5. <\/p>\n
President Trump signed a bill to terminate the partial government shutdown, bringing some relief. He also announced upcoming discussions with Iran in Oman. The US Dollar Index (DXY) nears 97.70 despite mixed data, and the Prices Paid Index increased to 66.6, with a decline in the Employment Index from 51.7 to 50.3.<\/p>\n
The US Dollar showed the most strength against the New Zealand Dollar. AUD\/USD drops to approximately 0.6970 as the USD performs strongly, with the RBA having recently raised interest rates. EUR\/USD remains around 1.1800, with the ECB expected to hold interest rates ahead of an announcement.<\/p>\n
Meanwhile, USD\/CAD trades at roughly 1.3680 and GBP\/USD at 1.3640, as both await central bank decisions. USD\/JPY reaches a seven-day high of 156.70, demonstrating USD strength against all major currencies. Gold remains stable at around $4,908 following the resolution of the US shutdown and easing geopolitical tensions.<\/p>\n
Upcoming events include key economic data releases and monetary policy decisions from the Bank of England and the European Central Bank.<\/p>\n
Looking back at this time in 2025, we saw the US Dollar strengthen even with mixed signals like a very weak private jobs report. The end of a government shutdown provided a tailwind, pushing the Dollar Index (DXY) toward 97.70. This created a template where the dollar could rally on the removal of domestic uncertainty.<\/p>\n
The situation today shows a dramatically different labor market, which should inform our strategy. While the ADP report showed a meager 22,000 jobs added in January 2025, recent data from January 2026 showed a blowout Non-Farm Payrolls report, with the economy adding 353,000 jobs, crushing expectations. This underlying economic strength, far greater than a year ago, supports a continued hawkish stance from the Federal Reserve and a stronger dollar.<\/p>\n
This economic outperformance is reflected in the Dollar Index, which is now trading firmly above 104, a significant climb from the 97.70 level we saw a year ago. For derivative traders, this sustained strength suggests that buying call options on the USD against currencies with weaker economic outlooks remains a viable strategy. The dollar’s yield advantage, with the Fed Funds rate holding between 5.25% and 5.50%, makes shorting it a costly trade.<\/p>\n
Inflationary pressures, which were already visible in the 2025 ISM Prices Paid index of 66.6, have remained a central theme for the Federal Reserve over the past year. Even though headline CPI has cooled to around 3.1%, it remains stubbornly above the Fed’s target. This reinforces the “higher for longer” interest rate narrative, meaning volatility options might be attractive around key inflation data releases.<\/p>\n
The divergence between major economies is much clearer now. In February 2025, EUR\/USD was trading near 1.1800 despite a soft inflation print; today, the pair is struggling to hold ground near 1.0700. This year-long trend makes bearish strategies, such as buying puts on the EUR\/USD, a logical consideration, especially as the US economy continues to outperform the Eurozone.<\/p>\n
Similarly, other pairs show the same pattern of dollar dominance. While AUD\/USD was near 0.6970 then, it now trades closer to 0.6500, weighed down by global growth concerns despite the RBA’s actions. The consistent theme is that US economic resilience provides a strong case for maintaining long dollar positions through futures or options.<\/p>\n
Last year’s focus was on resolving domestic political issues, but today’s is on the Fed’s data-dependent policy. We should anticipate that any upcoming data suggesting the US economy is not slowing down will further fuel dollar strength. Therefore, positioning for continued high interest rates and a strong dollar seems to be the most prudent path for the coming weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US adds fewer jobs than expected; USD strengthens broadly; markets await central bank decisions and data.<\/p>\n","protected":false},"author":62,"featured_media":16963,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-40979","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/40979","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=40979"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/40979\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16963"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=40979"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=40979"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=40979"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}