Dollar Recovers Modestly Amid US Data Uncertainty
The US dollar has staged a modest recovery this week after a slide due to weak data and concerns about the country's debt. The greenback has been on the back foot amid contraction in job creation, as revealed by last month's NFPs, and the softness in the CPI data for July.
This rebound is not a change in outlook, however, as investors still assign only a 35% chance of a rate hike at the September Fed gathering. They are penciling in only 40bps worth of rate hikes by the end of 2027, and the slide in oil prices has eased inflation fears, allowing the Fed's implied rate path to remain relatively flat.
The agenda for next week includes ISM PMIs for August and the non-farm payrolls report. The weekly ADP prints have been in a recovery mode in August, tilting the risks to Friday's NFP report to the upside.