The US dollar extended its early-year gains, trading near a one-month peak on Friday, 9th January 2026. However, its upward momentum faces significant tests from two imminent events: a critical domestic jobs report and a landmark Supreme Court decision on former President Donald Trump's tariff policies.
Jobs Report and Fed Policy in Focus
Investor attention was firmly fixed on the December employment report from the Bureau of Labor Statistics, scheduled for release before the market open. Economists anticipated an addition of around 70,000 jobs and a slight dip in the unemployment rate to 4.5%. While a softening labour market is a recognised risk for the Federal Reserve, the central bank has remained cautious about committing to deeper interest rate cuts, primarily due to persistent inflation concerns.
This hawkish stance from the Fed has sustained upward pressure on the dollar and Treasury yields throughout the week. Reflecting this strength, the U.S. dollar index (DXY), which measures the currency against a basket of six major peers, was up 0.12% at 99.06. The index has climbed approximately 0.65% this week, marking its best five-day performance since November and reaching its highest level since early December.
Supreme Court Tariff Ruling: A $150 Billion Question
Potentially overshadowing the jobs data is an expected ruling from the U.S. Supreme Court regarding the legality of tariffs imposed under the 1977 International Emergency Economic Powers Act (IEEPA). Although not officially confirmed, the Court's regular schedule suggested a verdict could come as early as 10 a.m. Eastern Time on Friday.
The stakes are enormous. A ruling against the previous administration could trigger tariff refunds estimated as high as $150 billion and cast doubt on several trade deals negotiated last year. Currency strategists are divided on the potential impact on the dollar.
Diverging Views from FX Strategists
Francesco Pesole, an FX strategist at ING, suggested that such a scenario might ease inflation pressures and boost corporate profits but worsen the fiscal outlook. "Net-net, this could be a moderate dollar positive as the Fed has been more focused on growth and jobs than inflation," he noted, adding the central bank might feel less pressure to ease monetary policy.
In contrast, Steve Englander of Standard Chartered offered a different perspective. He argued that the dollar's fate hinges on whether the ruling preserves tariff revenues. "Refunds and significantly diminished tariff revenues would pressure rates higher and would likely be dollar negative," Englander stated in a research note published on Friday.
As markets digest these twin catalysts, the dollar's trajectory for the coming months hangs in the balance, with outcomes set to influence global trade dynamics, inflation expectations, and the Federal Reserve's policy path.
