Dollar Waits on Payrolls as Rate Expectations Hold Steady
The US dollar remains in a wait-and-see mode ahead of tomorrow's payrolls report. Despite improved risk sentiment related to Gulf tensions, Federal Reserve rate expectations remain stable, supporting the dollar.
Risk-on tone has favored higher-beta currencies over the dollar this week, but moves have been contained due to caution surrounding the payrolls report. The FX market is waiting for tomorrow's data and Fed communication to outweigh moves in oil prices and geopolitical headlines.
According to ING's FX Strategist Francesco Pesole, stable expectations for upcoming Fed meetings remain unchanged since July's announcement. This week's price action has shown that US rate expectations are driven by data and Fed communication rather than energy prices.