US Dollar Faces NFP Reckoning as September Fed Hike Odds Hang in Balance

Traders are closely watching today's nonfarm payrolls report as it may determine whether markets price in a higher or lower chance of a September Federal Reserve rate hike. Fed funds futures have recently pared expectations for two rate hikes by December, with the probability of a September hike sitting at 54.6% as of Thursday's close.

The US dollar is already near support levels and could be weighed down if the NFP report undershoots expectations, further reducing the odds of a September hike. A weak NFP report could also impact crude oil prices, which have fallen by around 20% over the past fortnight due to hopes of a US-Iran peace deal.

The upcoming NFP report is crucial for determining market expectations of a Fed rate hike in September. If the numbers are stronger than expected, it could lead to an increase in the odds of a rate hike, while a weaker-than-expected report could weigh on the dollar and crude oil prices.