FOREX-Dollar advances as Fed likely to slow rate-cut pace after US data

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      US job openings rise in November, hiring slows


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      US services sector activity increases in December


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      US rate futures price in just one rate cut this year



 (Recasts, adds new comment, US data, FX table, bullets, byline, MILAN
and NEW YORK datelines, FX table, updates prices)
    By Gertrude Chavez-Dreyfuss and Stefano Rebaudo
       NEW YORK/MILAN Jan 7 (Reuters) - The U.S. dollar gained on
Tuesday after economic data showing a generally stable jobs market and
a still robust services sector suggested that the Federal Reserve will
likely slow the pace of its current rate-cutting cycle.
        The greenback rose to a near six-month peak after the U.S.
data. It was up 0.4% at 158.195 yen. Earlier in the global
session, the dollar hit its highest since July of 158.425 yen.

        The euro, on the other hand, slipped 0.1% to $1.0378
, extending its fall after the data.

        Data showed that U.S. job openings unexpectedly increased in
November, although hiring slowed during the month. Job openings, a
measure of labor demand,
    rose 259,000 to 8.098 million
     by the last day of November, according to the Bureau of Labor
Statistics Job Openings and Labor Turnover Survey, or JOLTS report.

        Hires, however, dropped 125,000 to 5.269 million in November.
Layoffs were little changed at 1.765 million.

        At the same time, U.S. services sector activity
    accelerated in December
    , while a surge in a measure of prices paid for inputs to near a
two-year high pointed to elevated inflation. The Institute for Supply
Management's non-manufacturing purchasing managers index (PMI)
increased to 54.1 last month from 52.1 in November amid strong demand.

        "The data definitely backs a pause from the Fed this month.
It's quite likely the Fed sits back and waits to cut further until at
least March," said Helen Given, FX trader at Monex USA in Washington.

        "Chatter from Fed officials lately backs this as well, and the
central bank will also have to contend with potentially inflationary
economic and trade policy from the Trump administration as well. The
Fed will in all likelihood slow its easing schedule substantially this
year, and we don't see a January cut as on the table at all."

        Following the data, the U.S. rate futures market has priced in
a 93% chance of a pause in rate cuts this month, and a 6.9%
probability of easing, according to LSEG estimates. Rate futures have
also implied just one rate cut this year of 25 basis points.

        Investors are also assessing whether President-elect Donald
Trump's policies on tariffs will align with his rhetoric.
    Market participants have been pricing in a scenario where the
implementation of widespread tariffs could boost U.S. inflation,
potentially limiting the Federal Reserve's ability to cut interest
rates and thereby supporting the dollar's strength.
    Now, they are wondering whether officials are preparing to water
down some of Trump's campaign promises, while a lot of uncertainty
remains about future moves in U.S. policy.
    Trump on Monday denied a Washington Post report that said his
aides were exploring tariff plans that would only cover critical
imports.
    In late morning trading, the U.S. dollar index, which
gauges the currency against major rivals rose 0.2% to 108.48, after
dropping to as low as 107.74 overnight, its weakest since Dec. 30.
    On Jan. 2, the index hit a high of 109.58 for the first time since
November 2022, largely due to expectations that Trump's promised
fiscal stimulus, reduced regulation and higher tariffs would boost
U.S. growth.
    "With numerous large policy shifts on the horizon, markets should
be prepared for a lot more volatility ahead," said George Saravelos,
head of global forex strategy at Deutsche Bank.
    On tariffs specifically, "there are likely to be multiple
overlapping legislative and executive initiatives with rolling
deadlines and announcements throughout the year," he added.


 Currency
 bid
 prices on
 Jan.7
 0349 p.m.
 GMT
 Descripti  RIC    Last      U.S.       Pct     YTD Pct  High     Low
 on                          Close      Change           Bid      Bid
                             Previous
                             Session
 Dollar     84
 Euro/Doll  356
 Dollar/Ye  36
 Euro/Yen   64
 Dollar/Sw  23
 Sterling/  481?
 Dollar/Ca  99
 Aussie/Do  238
 Euro/Swis  96
 Euro/Ster  88
 NZ         39
 llar
 Dollar/No  495
 Euro/Norw  219
 Dollar/Sw  949
 Euro/Swed  608