• Dollar gains ahead of official US jobs report
• Signs of a healing labor market could weigh on Fed rate cut conditions
• Yen hits annual lows, could spark new intervention warnings
• Wall Street mixed ahead of NFP, oil rebounds on Iranian tensions

Is the US labor market healing?

Even after a slight increase for the US last week, gains continued against its larger counterparts.

Investors appeared to be bracing for a decent jobs report today, the first to be reported publicly since the US government shutdown. Expectations are for that to decline somewhat to 66K from 64K last month, and to decline 4.5% and 4.6% for this. Average hourly earnings are forecast to accelerate by 3.5% to 3.6% y/y.

After the rebound in private employment revealed by the report, and the sub-index bouncing back into expansion territory, another rebound suggesting the US labor market may have begun to heal could prompt traders to scale back their bets, especially if wages pick up.

Currently, investors are penciling in about 56bps worth of rate cuts this year, which translates to slightly more than two-quarter-point cuts, in contrast to the Fed’s latest dot plot, which indicated just one. Amid the upside revision of Q4 GDP growth to 5.4% Q/Q SAAR by the Atlanta Fed model, a later strong jobs report later today could convince investors that a smaller amount of rate cuts may be needed and thus allow the US dollar to extend its recovery.

Yen traders tend to flirt with areas of intervention

It is suffering most today, perhaps as geopolitical tensions between Japan and China and a slowdown in wage growth make investors skeptical that the BOJ may raise rates again soon.

Dollar/yen is coming off a December 19 high of 157.77. A break above that level would send the pair into territory last seen a year ago and could trigger fresh warnings of intervention by Japan’s finance ministry.

Wall Street closes mixed ahead of NFP data

On Wall Street, major equity indices were mixed in Thursday’s session. Gained some ground, but lost. Closed practically no change. Technology stocks were lower today as a potentially strong NFP report meant long-term borrowing costs and current values ​​could be lowered, while defense companies advanced after US President Trump called for an expected $1.5 trillion military budget.

With prices rising, investors may be more cautious ahead of key data releases. However, there is no evidence that the AI ​​bubble has burst. The drivers that have pushed Wall Street to record highs in 2025 are still in place, especially with estimates pointing to a surprising performance by the U.S. economy.

A day after surpassing market capitalization for the first time since 2019, it was among the few tech giants to become the second most valuable firm in the US.

Oil’s recovery is beginning to reverse due to tensions in Iran

Thursday rebounded strongly as tensions flared in Iran, raising concerns about Iranian oil production. An internet blackout was reported across the country yesterday, as protests over economic hardship continue.

However, more and more concerns remain as to how much Venezuelan oil will be sold in the future, at a time when global inventories continue to rise and there is no limit. So, as long as the situation in Iran escalates to something bigger, the possibility of a rebound in oil prices remains limited and short-lived.