US Payrolls Data Brings Heightened Volatility Risks
As markets await the release of July's US payrolls, analysts are warning of heightened risks of an outsized market reaction. The data is expected to be closely watched for clues on the Federal Reserve's interest rate decision in September.
The FXStreet analysis calls for a modest rise in employment to 70,000, slightly below consensus expectations of 80,000. Meanwhile, the unemployment rate is expected to tick higher to 4.3%, which could lead to a small dollar drop. However, the analysts caution that this scenario should not drastically change markets' conviction levels about the September FOMC.
The dollar has regained some ground ahead of the release, driven by souring risk sentiment and an oil rebound. However, some precautionary dollar buying into today's data event may also be at play. The analysts expect the Fed to stay on hold this year, leading to USD weakness in the next couple of months.
The EUR/USD is expected to remain range-bound between 1.150 and 1.155 ahead of next week's US CPI release. The analysis suggests that the market's sensitivity to the payroll release could be even larger due to the lack of conviction about the Fed's September meeting.