Investing.com – The U.S. dollar gained slightly on Friday and investors expressed some caution ahead of the eagerly anticipated monthly jobs report, while the euro continued to show weakness.

At 05:00 ET (10:00 GMT), the Dollar Index, which tracks the dollar against a basket of six other currencies, was up 0.1% at 105,827, near three-week lows after an overnight decline of 0.6%.

Wages can drive the dollar

The dollar bulls were partially contained this week, with the weekly pointing to a weakening labor market, suggesting the Federal Reserve has room to cut interest rates further.

But Fed Chairman Jerome Powell indicated in a speech earlier this week that the U.S. economy is now stronger than the central bank expected in September, when it began cutting interest rates.

The market still expects a rate cut in December, but the official labor market report, which will be released later in the session, may determine this.

Forecasts focus on employment growth of about 200,000 in November, rebounding from the modest hurricane-driven enhance of 12,000 in October, while growth is expected to enhance to 4.2% from 4.1%.

“The market remains on the dollar for a long time after two months of growth fueled by Trump. Investors like the dollar’s 2025 story, but the question is whether they will have to experience a position shock first. Today poses a risk for these positions in the form of the November jobs report,” ING analysts said in a note.

Euro affected by tender data from Germany

In Europe, it fell 0.1% to 1.0575, with the single currency hit by an unexpected decline in October, pointing to further weakness in the dominant euro zone economy.

Output in October fell 1.0% from the previous month, following an upwardly revised 2.0% decline in September and a 2.6% gain in August.

“This means that the industrial economy is still in a downturn,” Germany’s economy ministry said in a statement.

The total rose 0.4% quarter-on-quarter in the third quarter, according to data released earlier on Friday, representing an annual gain of 0.9%.

This slight enhance points to another interest rate cut by the European Central Bank next week, with the market pricing in more than 150 basis points of easing by the end of 2025.

At the same time, traders must consider further political turmoil in France after Prime Minister Michel Barnier lost a no-confidence vote earlier this week and President Emmanuel Macron is expected to appoint a up-to-date prime minister soon.

The government’s collapse leaves France with no clear path to reducing its budget deficit, ratings agency Standard & Poor’s said on Thursday.

“With less than four weeks left until the end of the year and even less time remaining before the December 21 budget deadline, regardless of whether a up-to-date government is formed, S&P Global Ratings believes that the adoption of a 2025 budget amendment is unlikely. plan, which is to be adopted by the end of 2024, is low,” he said.

saw an enhance of 0.1% to 1.2763, supported by sterling data showing UK house prices rose for a fifth consecutive month in November, pointing to economic recovery.

The mortgage lender said prices rose 1.3% on the month, the biggest gain so far this year, pushing the annual growth rate to 4.8%, the highest level since November 2022.

Asian currencies muted

In Asia, most currencies weakened on Friday ahead of key US employment data.

gained 0.3% to 150.57, rose 0.2% to 7.2709 and fell 0.4% to 0.6426.

rose 0.5% to 1,419.96, with the pair expected to rise 1.8% this week, the biggest weekly gain since early April after President Yoon Suk-Yeol’s failed attempt to impose martial law.

fell slightly to 84,680 after leaving benchmark interest rates unchanged on Friday, as expected, but lowering the cash reserve ratio requirement for local banks.

The central bank also lowered its economic growth projection for the current fiscal year and raised its inflation estimate.