Key points:

• DXY climbs toward 100.00
• February jobs forecast: 58,000
• Forex deals in limbo

Traders expect to see 58,000 jobs created in February. Revisions will also be front and center for direction picking.

🪖 War Premium Flows Into the Dollar

• The US dollar index DXY pushed toward 100.00 on Friday, touching a session high of 99.30 as the US-Iran conflict showed no signs of cooling.
• Oil rising, stocks falling, and uncertainty spreading fast is the kind of environment that sends traders straight into the dollar.
• The dollar index measures the greenback against a basket of six major currencies. When global risk spikes, the dollar tends to strengthen because investors treat it as the world’s default safe haven, the financial equivalent of hiding under the mattress, except the mattress earns yield.
• The dynamic is straightforward: war premium pushes oil higher, oil pushes inflation fears higher, inflation fears push rate cut hopes lower, and lower rate cut hopes push the dollar higher. Everything is connected, and right now the chain runs through the Middle East.

💼 Jobs Day: Brace for 58,000

• February nonfarm payrolls, coming later today, are expected to show just 58,000 jobs created, less than half of January’s 130,000 print. A number that weak would normally send rate cut bets surging and the dollar lower. Normal, however, is not the word for this week.
• Nonfarm payrolls USNFP is the monthly count of US jobs added outside of farming. It is one of the single most market-moving data releases on the calendar, capable of repricing currencies, bonds, and equities within seconds of release.
• Revisions to prior months will be just as closely watched as the headline number. January’s 130,000 figure already carried an asterisk for many analysts. A lower revision would deepen the pullback narrative and hand the Fed a harder decision to sit with.

🌍 Currencies Search for Direction

• The EURUSD was drifting near $1.16 this morning, searching for a catalyst to break its holding pattern. A soft jobs print could give the euro the push it needs, while a surprise beat would likely send it back toward support.
• The USD/JPY was tracking higher on the week, with the yen caught between its traditional safe haven appeal and a Bank of Japan still moving cautiously on rate hikes. Two safe havens pulling in different directions makes for messy price action.
• The Fed is not likely to move on a single data point, especially one set against a geopolitical backdrop this noisy. But markets will trade the number hard regardless. That is what markets do. They react first and contextualize later.

Source: Tradingview