Dollar Holds Gains Ahead of US Payrolls Data Release

The dollar held onto its gains on Friday ahead of the US September payrolls data release. The sterling edged higher, rising by 0.05% to $1.3207 and the euro firmed up slightly, gaining 0.06% to $1.1250 at 05:48 ET (09:48 GMT).

ING's global head of markets, Chris Turner, stated that with energy prices remaining high and US activity resilient, the dollar can largely hold its gains, especially against the euro. He expects the dollar index to reach the 102.85 area.

The pricing for a Fed rate hike in October fell to 28% from 70% a week ago after Fed Vice Chair Philip Jefferson echoed John Williams in saying the Fed should not rush into back-to-back hikes, which were considered dovish-leaning comments.

Short-dated US rates posted their first sizeable fall since late August, and ING believes markets are settling on a December hike. The September non-farm payrolls data is expected to show a gain of 85,000-90,000 with unemployment at 4.1% and earnings up 3.1% year-on-year.