[MARKET ANALYSIS] Dollar is little changed after recent mixed data including disappointing labour market proxies ahead of Friday's NFP report

DXY: Flat

• Trades little changed overnight after marginally gaining yesterday to track higher US yields in the short end after ISM Services topped estimates and pointed to the strongest growth in the services sector since October 2024. Conversely, job openings unexpectedly deteriorated, and the ADP December report also disappointed, although markets had brushed that aside, with some more labour market proxies scheduled for release today, heading into Friday's NFP report.

EUR/USD: +0.1%

• Rebounded off the prior day's trough but with upside limited in the absence of any fresh pertinent catalysts and with the recent EU flash inflation data unlikely to change the ECB's narrative.

GBP/USD: Flat

• Lacks demand with price action stuck near 1.3450 after having suffered alongside cyclical peers during US trading hours.

USD/JPY: +0.1%

• Eked mild gains as Japanese yields ticked lower following the softer-than-expected wage data from Japan.

Antipodeans: AUD/USD Flat / NZD/USD Flat

• Struggled for direction after ultimately trickling lower on Wednesday, and with yields in Australia declining following recent softer-than-expected inflation data and a contraction in exports, while there were comments from RBA Deputy Governor Hauser, who said they have likely seen the last rate cut in the cycle and that the chance of near-term rate cuts is very low.

The dollar remains stable following mixed labor market data as markets prepare for Friday's NFP report. While recent services data supports growth, disappointing job proxies suggest potential weakness in the labor market, which could influence upcoming Fed policy decisions. Given this backdrop, traders should watch for further labor indicators that may shift expectations around interest rates.