FX Daily: Looming payrolls can keep FX volatility in check
USD: Wait-and-see mood can dominate today News of a deal between Iran and Oman to open a safe shipping route in the Strait of Hormuz has kept the FX market in risk-on mode, favouring a rotation from the dollar to higher-beta currencies. Even so, G10 moves have been contained this week, likely because tomorrow’s US ...
Tomorrow's US payrolls report looms as the key catalyst for FX markets, with caution dominating the mood due to its notoriously difficult-to-predict nature. The G10 moves have been contained this week, likely because of this uncertainty. Rate pricing for upcoming Fed meetings remains little changed since July's announcement, with expectations of 14-17bp for September and 30-35bp for December.
Meanwhile, Brent oil prices fell by $15/bbl, indicating that US rate expectations are currently driven more by data and Fed communication than energy prices. ADP payrolls came in at 44k, which is soft, while ISM services rose less than expected to 54.1, with the services employment subindex plunging to 47.5, signaling mild downside risks for tomorrow's payrolls.
Markets are also waiting for news on US-Iran negotiations, with little pessimism left in FX markets. Positive headlines on that topic may not generate sustainable USD weakness. As such, a wait-and-see stance may keep volatility contained and the dollar broadly range-bound.
Written by urgent.news from Hellenic Shipping News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
