US Dollar: Fading rallies as Fed pricing peaks – TD Securities
TD Securities' Macro Research’s FX team notes the softer US payrolls data is only marginally negative for the Dollar, with the labor market still described as buoyant and neither overheating nor deteriorating.
TD Securities' FX team notes that the weaker-than-expected US payrolls data has a limited impact on the US Dollar, as the labor market remains strong and not overheating or deteriorating. They believe that the market's pricing for hawkish Federal Reserve policy may have peaked and that near-term rate hike expectations are easing in both the US and Europe.
Consequently, they are more confident in fading US Dollar rallies than in pursuing any return to 2025 highs. The softer payrolls report, which includes headline figures, the Advance/Weekly Earnings index, and revisions, has only slightly pressured the US Dollar. While there are no robust bullish signals for the US Dollar based solely on US data and Fed policy, the overall macro fundamentals do not appear to justify moving into a higher orbit for the currency or returning to peak safe haven levels.
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