US Dollar Strengthens Ahead of Key Jobs Report
The US dollar is trading higher on Friday, poised for another positive week, as investors await the release of the monthly US nonfarm payrolls report. This data is expected to have a significant impact on Federal Reserve policy decisions.
At 03:40 ET (07:40 GMT), the Dollar Index, which measures the greenback against a basket of six major currencies, was up 0.2% at 106.279. Although it remains below the 11-month high of 107.34 seen earlier in the week, the dollar is still on track for its 12th consecutive week of gains.
September Jobs Report Anticipated
Later in the session, the September employment report will be released, with expectations of approximately 170,000 new jobs created during the month, slightly lower than the previous month.
Simultaneously, the unemployment rate for September is also anticipated to decrease to 3.7% from August’s rate of 3.8%.
This week has seen a mixed bag of labor market data. It started with higher than expected jobless claims for the end of August, followed by lower than expected employment figures from ADP. On Thursday, initial jobless claims increased from the previous week but fell slightly below expectations.
Despite these fluctuations, the labor market data has generally remained resilient, reinforcing the Federal Reserve’s stance on maintaining higher interest rates for a longer period. This has caused US Treasury yields to rise, supporting the strength of the dollar.
According to analysts at ING, “Market pricing remains well below the FOMC dot plot expectations. Ultimately, there is still room for a hawkish repricing at the front end of the USD curve, and the dollar’s upside risks remain substantial.”
Euro Rebounds Following German Factory Orders Increase
The euro has seen a slight increase, rising 0.1% to 1.0535 against the dollar. This comes after hitting a fresh low of 1.0448 earlier in the week. However, the euro is still on track for its 12th consecutive week of losses against the dollar.
The single currency received a boost from the news that German factory orders rose more than expected in August, increasing by 3.9% after a revised drop of 11.3% in July.
ING adds, “EUR/USD has rebounded from the 1.0450 lows but may lack enough buyers above the 1.0530/1.0550 area. The dollar remains an expensive sell, and there simply isn’t a compelling story in the eurozone to counter the US exceptionalism narrative.”
Yen Strengthens But Stays Below 150 Level
The Japanese yen has gained 0.2% against the dollar, reaching 148.86. However, it remains below the 150 level seen earlier in the week, leading to speculations of possible interventions by Japanese authorities to support the weakened yen.
In other news, the British pound rose to 1.2193 against the dollar, as UK house prices fell by 0.4% in September, according to data from Halifax. This marks an improvement from the 1.8% decline seen in the previous month.