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The upcoming U.S. non-farm payrolls report, scheduled for release at 8:30 AM ET, is expected to show a softer job gain of around 59,000, down from January's strong 130,000. Key factors include the California nurses' strike, which could subtract 31,000 jobs, and potential weather disruptions. The unemployment rate is projected to remain at 4.3%, though some analysts warn of a slight rise to 4.4%. Retail sales data for January also loom, with expectations of a -0.3% decline. Markets are pricing in no Fed rate cuts in March and only 35 basis points of cuts by year-end, reflecting cautious optimism about economic resilience. For forex traders, the report will heavily influence EUR/USD, USDJPY, and GBPUSD movements. A weaker-than-expected jobs report could pressure the U.S. dollar, while stronger data might support it. The retail sales figures add another layer of volatility, particularly for USD crosses. Geopolitical tensions in the Middle East, notably the Iran situation, are also elevating oil prices, which could indirectly impact currency markets through inflation concerns. MENA investors should monitor how the Fed's policy outlook and regional geopolitical risks interact. A prolonged U.S. economic slowdown could weaken the dollar, benefiting Gulf exporters with USD-denominated debt. However, rising oil prices from Middle East tensions may offset some gains. Traders should watch the 59,000 payrolls number, 4.3% unemployment rate, and the Fed's 35-basis-point cut forecast as key benchmarks.
