US Dollar Rally Fails to Gain Momentum Despite Strong Jobs Data

The US dollar saw a brief boost following the release of stronger-than-expected August jobs data. Nonfarm payrolls rose by 162k, beating consensus estimates of 55k, while July's employment was revised upwards to 21k from an initial decline.

The unemployment rate remained steady at 4.1%, and labour force participation improved to 61.6%. However, wage growth eased slightly to 3.1% year-over-year from 3.2% previously.

Markets are now pricing in a significant chance of further Federal Reserve tightening by December, with approximately 60% probability of a 25bps Fed hike at the September FOMC meeting and around 35bps of cumulative tightening by year-end.