FOREX-Dollar firms as solid US data suggests Fed likely to slow easing cycle

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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


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      Bitcoin drops more than 5% after hitting three-week high earlier



 (Adds analyst comments, graphics, updates prices)
    By Gertrude Chavez-Dreyfuss
       NEW YORK, Jan 7 (Reuters) - The dollar strengthened on Tuesday
as U.S. 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 against the yen after
the U.S. data. It was last up 0.2% at 157.875 yen. Earlier
in the global session, the dollar hit its highest since July of
158.425 yen.
    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.


    U.S. services sector activity also accelerated in December, while
a surge in a measure of prices paid for inputs to a near 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.
    "The really big surprise in the report was the jump in the prices
paid index to an eleven-month high of 64.4 in December from 58.2 -
perhaps this reflects higher transportation costs or delivery charges
in the holiday season," wrote Dave Rosenberg, founder and president of
Rosenberg Research, in a note to clients.
    "Suffice it to say that the (ISM) report was enough to push the
markets to now expect a little more than one Fed rate cut for the
year, and that has now been delayed to July from June."
    Following the data, the U.S. rate futures market has priced in a
95% chance of a pause in rate cuts this month, and a 4.8% probability
of easing, according to LSEG estimates. Rate futures have also implied
just 37 basis points of cuts in 2025, compared with two cuts expected
under the Fed's "dot plot" or rate forecasts.
    Investors are also assessing whether President-elect Donald
Trump's actual policies on tariffs will be consistent with his
hard-line rhetoric.
    Market participants have been pricing in a scenario where the
implementation of widespread tariffs could boost U.S. inflation,
potentially limiting the Fed's ability to cut interest rates and
thereby supporting the dollar.
    But they wondered whether officials are preparing to water down
some of Trump's campaign promises. Trump on Monday denied a Washington
Post report that said his aides were exploring tariff plans that would
only cover critical imports.
    Karl Schamotta, chief market strategist, at Corpay in Toronto
thinks, however, that the market is betting Trump "will ultimately
implement a narrower set of tariffs on major trading partners, and is
downgrading U.S. inflation and rate expectations in line with that."

    In afternoon trading, the U.S. dollar index, which measures
the currency against six major units, rose 0.2% to 108.55, after
dropping as low as 107.74 overnight, its weakest since Dec. 30.
    On Jan. 2, the index hit a high of 109.58, a more than two-year
peak, due to expectations that Trump's promised fiscal stimulus,
reduced regulation, and higher tariffs would boost U.S. growth.
    The euro, on the other hand, fell 0.4% to $1.0352,
extending its fall after the economic numbers. The currency earlier
rose after Tuesday's Eurostat data showed inflation in the 20 nations
sharing the euro rose to 2.4% last month from 2.2% in November.
    Meanwhile, euro zone households increased their inflation
expectations in November, an ECB poll showed. Inflation in the 20 euro
zone nations picked up to 2.4% last month from 2.2% in November,
Eurostat said on Tuesday.
    Investors are also looking to ahead to Friday's U.S. nonfarm
payolls report. A Reuters poll showed a consensus forecast of 160,000
in December, down from 227,000 new jobs created in November.
    "The health of the U.S. labor market is paramount to expectations
for the Federal Reserve's actions this year so it's likely that, save
for major news on the incoming administration, we could see calmer FX
waters through Friday morning," said Helen Given, FX trader, at Monex
USA in Washington.
    In cryptocurrencies, bitcoin tumbled more than 5% to
$96,322.43, after earlier hitting a three-week high.




 Currency
 bid
 prices at
 7
 January?
 07:57
 p.m. GMT
 Descripti  RIC    Last      U.S.       Pct     YTD Pct  High     Low
 on                          Close      Change           Bid      Bid
                             Previous
                             Session
 Dollar     84
 Euro/Doll  349
 Dollar/Ye  36
 Euro/Yen   37
 Dollar/Sw  23
 Sterling/  481?
 Dollar/Ca  99
 Aussie/Do  234
 Euro/Swis  96
 Euro/Ster  88
 NZ         37
 llar
 Dollar/No  495
 Euro/Norw  219
 Dollar/Sw  949
 Euro/Swed  608