The U.S. dollar exhibited strength on Friday, marking another week of positive performance, as market participants eagerly awaited the release of the monthly U.S. nonfarm payrolls report, which carries the potential to influence the Federal Reserve’s policy direction.
As of 03:40 ET (07:40 GMT), the Dollar Index, tracking the greenback against a basket of six major currencies, was up 0.2% at 106.279. Although this figure stood below the 11-month high of 107.34 recorded earlier in the week, it remained on course for its twelfth consecutive week of gains.
Anticipation Builds for September Jobs Data
Investor focus was squarely on the forthcoming September employment report, with expectations set at 170,000 new jobs created during the month, marking a slight decrease from the previous month’s figures.
Simultaneously, the unemployment rate for September is projected to dip to 3.7%, down from August’s 3.8%.
The labor market data observed over the course of this week has presented mixed signals. It commenced with job openings exceeding expectations as of the end of August, followed by lower-than-expected private payroll figures from ADP. Additionally, Thursday witnessed an uptick in unemployment claims compared to the prior week, albeit slightly below market forecasts.
However, the overall resilience of the data has reinforced the Federal Reserve’s commitment to maintaining elevated interest rates for an extended period. This stance has led to a surge in U.S. Treasury yields, bolstering the U.S. dollar.
“Market pricing remains well below the FOMC dot plot expectations,” noted analysts at ING in a research note. “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 Inches Up on Positive German Factory Data
The EUR/USD currency pair inched up by 0.1% to 1.0535. Despite this slight gain, the euro continues to face headwinds, heading towards a record twelve consecutive weeks of losses against the U.S. dollar.
The euro received some support from the news of better-than-expected German industrial orders in August, which surged by 3.9%. This marked a significant improvement from the revised July drop of 11.3%.
However, ING analysts remained cautious, stating, “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 U.S. exceptionalism narrative.”
Yen Strengthens but Remains Below 150
The USD/JPY currency pair gained 0.2% to reach 148.86. Despite this uptick, it remained below the 150 level seen earlier in the week, sparking speculation that Japanese authorities might have intervened in the currency market to support the ailing yen.
In other developments, GBP/USD edged higher to 1.2193. Data from Halifax revealed that U.K. house prices fell by 0.4% in September, an improvement from the prior month’s 1.8% decline.
